Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-46892 June 28, 1940

ANTAMOK GOLDFIELDS MINING COMPANY, recurrente,

vs.
COURT OF INDUSTRIAL RELATIONS, and NATIONAL LABOR UNION, INC., recurridos.

Sres. DeWitt, Perkins y Ponce Enrile en representacionde la recurrente.

Sres. Paguia y Lerum en represetacion de la recurrida, National Labor Union.

IMPERIAL, J.:

Esta es una apelacion mediante certiorari interpuesta por la recurrente contra la orden dictada por el
Tribunal de Relaciones Industriales el 6 de mayo de 1939 que le obligo a que reponga en sus anteriores
trabajos o en otros substancialmente equivalentes a los 45 obreros enumerados en la peticion del 31 de
marzo de 1939 y a los 10 obreros encabezados por A. Haber que fueron excluidos indefinidamente, dentro
de 10 dias desde que reciba copia de la orden; que pague a estos 55 obreros los jornales que debieron
haber percibido desde la fecha de su suspension o separacion hasta la de su reposicion; y que pendiente de
resolucion las otras cuestiones que las partes han sometido, la recurrente se abstenga, bajo pena de
desacato, de despedir o excluir, sin permiso previo del tribunal, a cualquier obrero o empleado que se
hallaba bajo su servicio en la epoca en que surgio la disputa que este actualmente trabajando en las minas
o que sea repuesto en su trabajo de conformidad con la orden; y contra la resolucion del mismo tribunal
del 17 de agosto de 1939 que denego la mocion de reconsideracion de la recurrente presentada el 26 de
mayo de 1939.

El 12 de diciembrre de 1938 la recurrida National Labor union, Inc., en representacion de los obreros y
empleados de la recurrente que eran miembros de dicha union obrera, dirigio una carta a la recurrente
solicitando 21 reclamaciones en favor de sus afiliados. La carta fue recibida por la oficina de la recurrente
en Manila en un sobre timbrado por la estafeta de Baguio el 30 de mismo mes. Los funcionarios de la
recurrente convocaron a un meeting a sus empleados el 2 de enero de 1939 y en el informaron a todos sus
obreros que algunad de las demandas se habian aceptado y se habian puesto ya en practica, otras serian
consideradas y las restantes iban a ser rechazadas por ser irrazonables, y se les aconsejo que no
recurrieran a la violencia y observaran metodos legales en el arreglo de sus diferencias con la recurrentes.
En la noche del mismo dia los obreros y empleados de la recurrente se declararon en huelga y
abandonaron sus trabajos. La recurrnte dio cuenta inmediatamente de esta huelga al Departamento del
Trabajo y solicito su intervencion con el fin de solucionarla. El Secretario del Trabajo designo a Adolfo
Umengan, Investigador Especial del Departamento, y a Eladio C. Leao, Defensor Publico de la
Provincia Montaosa, para que intervinieran y vieran la manera de solucionar la huelga. Estos
funcionarios convocaron una conferencia a la que acudieron funcionarios de la recurrente, representante
de los huelguistas y Luis Lardizabal, Jefe de la Baguio Federation of Labor, una organizacion obrera
afiliada a National Labor Union, Inc. Como resultado de la conferencia las partes convinieron en el
siguiente arreglo amistoso:

AMICABLE SETTLEMENT
 In order to have the present strike of the contractors and laborers of the respondent company who
staged a walkout on January 3, 1939, amicably settled, the parties hereby mutually agree to end
the said strike under the condition that all laborers will be readmitted upon the execution of this
agreement; provided, that all laborers whose services should be dispensed with due to lack of
work in those tunnels where they are no longer needed will be given not less than fifteen days
employment from the date of this settlement or resumption of work, and provided, further, that as
soon as the stopes in 1360 and 1460 levels are opened and the services of men are needed, the
company will give preference to efficient laborers when reducing the personnel as above
mentioned in those working places and may transfer them to other division to replace inefficient
men.

In witness hereof, the laborers represented by a committee composed of Messrs. Luis Lardizabal,
Tomas Dirige, Victoriano Madayag, Maximo Conaoi, Daniel Lambinicio, and Juan Cerilo and the
Antamok Goldfields Mining Co. as represented by its President, Mr. Andres Soriano, have
hereunto placed their signatures this 4th day of January, 1939.

El convenio fue firmado por las partes el 4 de enero de 1939, pero los obreros no se presentaron sino a las
9 de la maana del 6 del mismo mes. La gerencia de la recurrente no permitio, sin embargo, a ningun
obrero que entrara en la seccion subterranea conocida como "830 level" por la razon de que el aire se
habia viciado con motivo de la huelga y era necesario renovarlo con aire puro con el fin de evitar
desgracias personales. Esta precaucion la tomaron los obreros como uan negativa de la recurrente a que
ellos trabajaran de nuevo, por lo que se declararon otra vez en huelga. A los huelguistas se unieron por
simpatia los obreros que trabajaban en la mina denominada "680 division," que es otra mina separada y
situada a 3 kilometros de la fabrica. Otra vez internivo el Departamento del Trabajo y por la mediacion de
Eladio C. Leao los obreros volvieron al trabajo en la noche del 6 de enero de 1939 en que los trabajos de
mina se reanudaron paulatinamente.

El 9 de enero de 1939 el Departamento del Trabajo endoso la disputa al Tribunal de Relaciones

Industriales de conformidad con el articulo 4 de la Ley No. 103 del Commonwealth y dicho Tribunal
celebro la primera vista del asunto el 13 del mismo mes en la Ciudad De Baguio. En esta vista se
discutieron una por una las 21 reclamaciones de la recurrida National Labor Union, Inc., y se llego por las
partes a un acuerdo sobre algunas de ellas, se sometieron otras a la decision del Triunal y las demas se
dejaron pendientes para ser vistas y resueltas mas tarde.

El 31 de marzo de 1939, hallandose pendiente aun de decision la mayor parte de las reclamaciones antes
mencionadas, la recurrida National Labor Union, Inc., presento una mocion en que alego que el capataz
A. Haber y otros 9 obreros de la recurrente habian sido indefinidamente suspendidos el 29 del mismo
mes; que estos obreros habian sido transferidos anteriormente a trabajos exteriores con el fin de
proporcionar a la recurrente una excusa para separarles mas tarde del servicio; que otro grupo de cerca de
30 obreros fueron despedidos por la compaia sin motivo alguno y sin autorizacion del tribunal; y que las
suspensiones y separaciones que asi se hicieron eran actos de venganza y discriminatorios para los
obreros, por cuya razon se pidio que los funcinarios de la recurrente responsables de dichos actos sean
castigados por desacato y que la recurrente sea obligada a reponer a los obreros en sus primitivos trabajos
dentro de las minas y a pagarles sus salarios correspondientes al periodo en que fueron separados del
sevicio. La recurrente contesto la mocion negando los hechos imputados y alego que Haber y sus 9
compaeros fueron suspendidos por su continua holgazaneria durante las horas de trabajo y por haberse
negado constantemente a trabajar, y que los 45 obreros encabezados por el capataz Victoriano Madayag
fueron despedidos por haber rehusado sealar a los responsables del maltrato del capataz Juan Moldero en
la maana del 30 de marzo de 1939. La mocion se vio el 3 de abril de 1939 y en la vista las partes
presentaron sus testigos. El tribunal designo a uno de sus agentes especiales para que se constituya en las
minas de la recurrente y practicara una investigacion con el fin de suplementar los hechos que se
probarondurante la vista. Despues de considerar las pruebas presentadas ante el y los hechos hallados por
el comisionado nombrado, el tribunal en su orden del 6 de mayo de 1939 declaro probados los hechos
siguientes:

1. The discharges and indefinite suspensions alleged in the motion were made by the respondent
without first securing the consent of the Court in violation of the order of this Court of January
23, 1939.

2. The discharges and indefinite suspensions were made by the respondent without just cause.

El la misma orden el Tribunal de Relaciones Industriales hace las siguientes consideraciones que apoyan
las conclusiones a que la llegado:

In the order of January 23, 1939, the respondent was enjoined to refrain from discharging any
laborer involved in the dispute without just cause and without previous authority of the Court. It
appears and no denial of the fact is made by the respondent that the dismissal is one case and
alleged suspension for an indefinite time in the other, which has all the effects of a discharge,
were made without seeking the authority of the Court.

The charge that Haber and the group of nine laborers were indefinitely suspended of continuous
loafing and refusal to work was not established. The real motive behind the lay was the
completion of their work "outside." Under the circumstances, the provision of the order of March
21, to the effect that these men should be returned to their work underground after the completion
of their work "outside" should have been observed. The respondent instead of complying with the
order laid off the men.

The discharge of Victoriano Madayag and his forty-four companions as a result of the Moldero
incident also lacks justification. In the case of Madayag, although he was present with Haber
when Moldero was attacked, neither one is accused of the aggression. The two of them were
conversing with Moldero with the latter was stoned from behind without anybody apparently
being able to point out the aggressor. Less justification can be found for the discharge of the
forty-four men as a result of the incident. The investigation disclosed that at the time of the
assault, they were at the Creek busy with their work. Both the distance and the topographical
situation of the place where the men were working, which is far and well below the bank of the
place of the incident, precluded their hearing of seeing clearly what transpired above them in the
place where Moldero was assaulted. An ocular inspection of the premises made by the
investigator confirmed this view. So far as is known, despite the investigations conducted by the
officials of the company and the policeman of the camp and by the constabulary authorities in
Baguio, the person or persons responsible for the stoning has not been determined. The
precipitate and unwarranted dismissal of the forty-five men after the incident seems to have been
spurred by an over anxious desire on the part of the company to get rid of these men.

As previously found, in the order of this Court of March 21, 1939, about 134 underground
laborers of the respondent were transferred and made to work 'outside of the mines' or surface
work. The majority of these men were muckers, miners, timbermen, trammers, and mine helpers
and had to their favor from 6 months to 5 years service in the mines of the company and not a few
of them have done underground work in several capacities and in different tunnels and divisions
of the mine. Among them are found leaders of the movement of the laborers for higher pay and
better working conditions which culminated in the strike called on January 3, 1939. These leaders
have been prominent in the formation of the union its activities and in connection with the strike.
The temporary transfer of these men to "outside" work was authorized by the Court in said order
on the strength of the assurance of the respondent that no more work suited for them inside the
mines existed. It was directed, however, in the aforesaid order that as soon as their outside was
completed the laborers should be immediately returned to their respective work inside the mines.
Subsequent events and acts of the officials of the respondent in charge of the mines have
convinced the Court work existed and exists for the men inside the tunnels and their transfers
were made to provide an opportunity to the company to dispense with their services as soon as
the work is completed. The unwarranted discharges of Haber and nine others and those of
Victoriano Madayag and his forty-four companions amply demonstrated this conclusion. Upon
the company's own admission, as shown in its reports in the records and upon the findings of the
investigator of the Court, more than four hundred (400) workers of different classes among them,
muckers, miners, timbermen, trammers and capataces coming from different mines in the region
have been employed by the respondent as fresh laborers. Almost all, if not all, of these men are
not members of the petitioner, the National Laborer Union, Inc.

At the same time the work in different tunnels and division in the mines are allegedly being
completed, the old workers are being laid off. Although a small number of the men found transfer
to other divisions being operated, the majority are being left without work. Instead of laying
hands on the old men laid off and making them work in the tunnels needing hands and reinstating
in the tunnel work those laborers transferred to the 'outside' department, the respondent preferred
to take in and hire other workers coming from different places because evidently they are not
members of the union.

There is no doubt in the mind of the Court that a good number of the position given of the men
who were employed after the strike numbering more than four hundred to date could have been
offered to the strikes who are now doing work "outside" and other who have been laid off on the
allegation that the underground work in which they were engaged had been completed. To
believe that not a single man or say a few among the latter could have met the requirements set by
the technical men of the company to perform the different classes of work for which the fresh
men were engaged because they lack the required efficiency, experience, physique. intelligence
and skill of the four hundred fresh laborers would be shutting the eyes of the court to realities.
These men prior to the occurence of the dispute, had worked for months and many for years in
the mines of the respondent and it can not be easily accepted that their experience gained in their
particular lines in the very property of the respondent would be inferior to that attained by the
other workmen in other mines in the district for an equal period of time. Their inefficiency as a
whole group can not be successfully sustained now because they were not transferred to surface
work for this reason but because of the alleged lack of work or completion of their work
underground. Had any of them been inefficient in the past, it can not be explained why the
company laborer continued in the service as the records of the company abound with instance of
discharges made in the past of laborers who were found either inefficient or incompetent or
whose services were unsatisfactory.

The company asserts ignorance of the union affiliations of the men in the mine but the evidence
stands uncontradicted that before the strike was called a petition was presented by the men to the
management carrying the signatures of about eight hundred (800) worker demanding higher pay
and better working conditions. When the men struck, the operation of the mine was completely
paralyzed and there is a strong indication that a great majority of the workers joined openly the
strike. It would not have been difficult for the respondent, with the means at its command, to find
 for itself the employees and laborers who remained loyal to the company and to consider those
who struck as either members of the union or its sympathizer.

The respondent's claim as to the motive for the suspension and discharges lacks substance and
support in the evidence and the inferences to be drawn from it. From all what appears, it is
inferred that the respondent desire to discourage membership in the union and to rout it if
possible. The wholesale discharges were the expression of such desire. The acts in the mind of the
Court, are calculated to have two effects. They will not only immediately affect the discharged
laborers but would also discourage other laborers from joining or remaining members of the
union.

The allegation that it has always been policy to consider the laborer's connection with the
company terminated upon termination of the working place in which he is employed is not
supported by the facts. It has been shown that as a general rule when work in a place is
completed, workers are transferred to another working place in one level or to another level,
although in some instances days may elapse before all the men in a bunch can be absorbed in
different levels.

It is alleged that mining operations in the property vary and involve several types, and that a
miner, for example, may be good in one type, but that it does not necessarily follow that he can
do good work in another type. And that the employment of men in particular jobs not suitable for
them increased the cost of production as a result of lower output. Consequently, the respondent
vehemently insists in its right of selecting the men that it should employ and that in the exercise
of this right it should not be restrained or interfered with by the Court. It contends that as to
fitness of a laborer to do a particular type of work the opinion of the management or its technical
men should be respected. But all these arguments are meaningless in the face of the finding of the
Court that the underground laborers transferred to the 'outside' work are not wanting in
experience, efficiency and other conditions alleged to be found among the fresh laborers. The
special qualifications to do particular work can not rightly be invoked in favor of the employment
of new laborers most specially in those cases of common or unskilled labor like muckers,
trammers, helpers, etc.

Under normal circumstances, the exercise of judgment of the employer in selecting men he is to
employ should not be interfered with. But when such judgment is arbitrarily exercised to the
prejudice of members of a labor union whose rights should be safeguarded in consonance with
the policies of the law, the Court not only feels it justified but rightly its duty to interfere to afford
protection to the laborers affected.

La recurrente presento una extensa mocion de reconsideracion de la indicada orden, mocion que fue
denegada por la resolucion del 17 de agosto de 1939. La orden del 6 de mayo de 1939 y la resolucion del
17 de agosto del mismo ao son las que dieron lugar a la apelacion interpuesta por la recurrente.

La recurrente sostiene que la Ley No. 103 del Commonwealth, conforme ha sido enmendada por las leyes
Nos. 254 y 355, es anticonstitucional (1) porque infringe el principio de separacion de poderes; (2) porque
por ella la Asamblea Nacional abdico de su facultad legislativa violando la doctrina sobre delegacion de
poderes; (3) porque las facultades judiciales que la ley confiere al Tribunal de Relaciones Industriales,
consideradas separadamente, son arbitrarias e irrazonables y permiten la privacion de la libertad y
propiedad sin el debido proceso de ley; y (4) porque suponiendo que la ley es valida y constitucional en
su totalidad, la porcion, por lo menos, del articulo 20 que dispone que el Tribunal de Relaciones
Industriales "adoptara sus reglamentos de procedimiento" debe declararse nula e invalida porque infringe
el articulo 13 del Titulo VIII de la Constitucion de Filipinas que obliga al Tribunal de Relaciones
Industriales a observar las reglas generales de procedimiento aplicables a los tribunales de justicia. La
recurrente alega en este respecto que como a ella se le ha sometido a un procedimiento arbitrario y
distinto del que se aplica a los demas litigantes en los tribunales de Filipinas, se le ha negado el debido
proceso de ley y el principio de igual proteccion ante las leyes.

La Ley No. 103 del Commonwealth que, como su titulo indica, provee a la proteccion del obrero, creando
un Tribunal de Relaciones Industriales facultado para fijar un jornal minimo para los obreros y la renta
maxima que se ha de pagar por los inquilinos; para poner en vigor el arbitraje obligatorio entre patronos o
propietarios y empleados o inquilinos, respectivamente, y prescribe penas por la infraccion de sus
decretos, se ha promulgado por la Asamblea Nacional en virtud de los preceptos contenidos en el articulo
5, Titulo II; articulo 6, Titulo XIII; y articulos 1 y 2, Titulo VIII, de la Constitucion de Filipinas que
disponen:

ART. 5. El Estado cuidara de promover la justicia social a fin de asegurar el bienestar y la

estabilidad economica de todo el pueblo.

ART. 6. El Estado debera proteger a todos los trabajadores, especialmente a las mujeres y a los
menores de edad, y debera regular las relaciones entre propietarios e inquilinos, y entre el trabajo
y el capital en la industria y la agricultura. El Estado podra establecer el arbitraje obligatorio.

ART. 1. El Poder Judicial estara investido en un Tribunal Supremo y en otros tribunales

inferiores que se establezcan por ley.

ART. 2. La Asamblea Nacional tendra la facultad de definir, prescribir y distribuir la jurisdiccion

de los varios tribunales, . . .

En cumplimiento de los preceptos constitucionales transcritos, la Asamblea Nacional promulgo la Ley

No. 103 del Commonwealth que crea el Tribunal de Relaciones Industriales que es un tribunal especial
con facultades judiciales (Pambusco Employees Union vs. Court of Industrial Relations et al., G.R. No.
46727; Ang Tibay et al. vs. Court of Industrial Relations et al., G.R. No. 46496, opinion concurrente del
Magistrado Jose P. Laurel). El articulo 1 de dicha ley provee que el Tribunal de Relaciones Industriales
ejercera jurisdiccion para considerar, investigar, decidir y zanjar toda cuestion, asunto, conflicto o disputa
que afecte o surja entre patronos y empleados u obreros, y entre propietarios e inquilinos o aparceros, y
para regular las relaciones entre los mismos, con arreglo y sujecion a las disposiciones de la ley. El
articulo 4 dispone que el tribunal tomara conocimiento, para fines de prevencion, arbitraje, decision y
ajuste, de cualquier conflicto agrario o industrial que motive o de lugar a una huelga o paro a causa de
diferencias que surjan en la cuestion de jornales, participacion o compensacion, horas de trabajo o
condiciones de aparceria o empleo, entre patronos y empleados u obreros, y entre propietarios e inquilinos
o aparceros, siempre que el numero de empleados, obreros, inquilinos o aparceros afectados exceda de
treinta, y que el conflicto agrario o industrial se someta al tribunal por el Secretario del Trabajo, o por una
o ambas partes interesadas, cuando el referido Secretario del Trabajo certifique en cuanto a su existencia
y la conveniencia de la intervencion del tribunal en bien del interes publico. Y el articulo 20 preceptua
que en la vista, investigacion y resolucion de cualquier cuestion o conflicto, y en el ejercicio de cualquiera
de sus deberes y facultades, el tribunal actuara de acuerdo con la justicia y la equidad y los meritos
substanciales de la causa, sin consideracion a los tecnicismos y formulismos legales, y no estara sujeto a
cualesquier reglas tecnicas de prueba legal, sino que formara juicio de la manera que crea justa y
equitativo. La Ley No. 103 confiere al Tribunal de Relaciones Industriales plena facultad disrecional para
resolver y decidir las disputas agrarias e industriales de la manera que crea justo e equitativo,
prescindiendo de los tecnicismos y formulismos legales, y la facultad asi concedida es judicial y no
legislativa, por lo que no infringe el principio de separacion de poderes, la prohibicion sobre delegacion
de facultades legislativas ni la proteccion igualitaria ante la ley. Como se ha dicho en el asunto de
Cincinnati, W. & Z. R. Co. vs. Comm'rs, of Clinton County '1852), 1 Ohio St., 88, citado en el asunto de
Rubi et al. contra La Junta Provincial de Mindoro, 39 Jur. Fil., 675, "Existe una verdadera diferencia
entre delegar la facultad para dictar leyes, lo cual supone necesariamente discrecion en cuanto a lo que
hayan de ser aquellas, y conferir atribucion o discrecion para hacerlas cumplir, discrecion que debe
ejecitarse con arreglo a la ley. La primera no puede hacerse en modo alguno; contra la segunda no cabe
interponer objecion alguna."

Para reforzar los argumentos en favor de la anticonstitucionalidad de la Ley No. 103 la recurrente hace
hincapie en lo resuelto en el asunto de Schechter vs. United States (1935), 295 U. S., 496, 79 Law. ed.
270, en que el Tribunal Supremo de los Estados Unidos declaro anticonstitucional la National Recovery
Act. Existe, sin embargo, una marcada diferencia entre dicho asunto y el que se considera porque la
National Recovery Act en vez de crear un tribunal de justicia, creo juntas con facultades legislativas y
autorizo al Presidente de los Estados Unidos a promulgar codigos que prescriban las reglas de
precedimiento con el fin de realizar los propositos de la ley.

El ultimo fundamento que se alega en contra de la validez de la Ley No. 103 se hace consistir en que las
facultades judiciales que concede al Tribunal de Relaciones Industriales son tan artibrarias e irrazonables
que permiten la privacion de la libertad y la propiedad sin el debido proceso de ley; y que se articulo 20,
por lo menos, adolece de este defecto fundamental porque confiere al Tribunal de Relaciones Industriales
la facultad de dictar sus propias reglas de procedimiento, lo cual contraviene el articulo 13, Titulo VIII, de
la Constitucion que prescribe que el Tribunal Supremo dictara reglas concernientes a los escritos de
alegaciones, practica y procedimiento uniformes para todos los tribunales de la misma categoria.

El articulo 20 de la Ley No. 103 se lee asi:

ART. 20. Reglamentos del Tribunal. El Tribunal de Relaciones Industriales promulgara sus
reglas de procedimiento y tendra las demas atribuciones que en general corresponden a un
tribunal de justicia: Entendiendose, sin embargo, Que en la vista, investigacion y resolucion de
cualquier cuestion o conflicto, y en el ejercicio de cualquier de sus deberes y faculades en virtud
de esta Ley, el Tribunal actuara de acuerdo con la justicia y la equidad y los meritos substanciales
de la causa, sin consideracion a los tecnicismos o formulismos legales, y no estara sujeto a
cualquiera reglas, tecnicas de prueba legal, sino que formara juicio de la manera que crea justo y
equitativo.

Una simple lectura de dicho articulo demuestra que la ley no ha facultado al Tribunal de Relaciones
Industriales a investigar y resolver las cuestiones y conflictos entre obreros y patronos, e inquilinos y
propietarios, de una manera arbitraria y caprichosa sin someterse a una norma de conducta determinada.
El articulo dispone claramente que las reglas de procedimiento que adopte, a las cuales debera ajustarse el
tribunal, deberan insperarse en la justicia y la equidad, y prescribe que el criterio que se forma debera
fundarse en los meritos substanciales de la causa sin consideracion a los tecnicismos o formulismos
legales. La Ley No. 103 que crea un tribunal especial denominado Tribunal de Relaciones Industriales
con facultad para dictar sus propios reglamentos y para resolver y decidir los conflictos agrarios e
industriales de acuerdo con los dictados de la justicia y equidad, no puede ser impugnada bajo el
fundamento de que auoriza la privacion de la libertad y propiedad sin el debido proceso de ley; ni pugna
con el precepto del articulo 13, Titulo VIII, de la Constitucion porque el Tribunal de Relacines
Industriales no es de la misma categoria que los juzgados municipales, juzgados de paz y juzgados de
primera instancia para los cuales se han dictado los reglamenos de los tribunales por el Tribunal Supremo.
En relacion con la validez y constitucionalidad de la Ley No. 103 y sus enmiendas, insertamos a
continuacion la opinion concurrente del Magistrado Lauren en el asunto de Ang Tibay, supra, cuyas
observaciones serviran para rebustecer la proposicion sentada de que la referida ley y sus enmiendas es
valida y no infringe la Constitucion.

It should be observed at the outset that our Constitutionwas adopted in the midst of surging unrest
and dissatisfaction resulting from economic and social distresswhich was threatening the stability
of governments theworld over. Alive to the social and economic forces atwork, the farmers of our
Constitution boldly met the problems and difficulties which faced them and endeavored to
crystallize, with more or less fidelity, the political, social; and economic proposition of their age,
and this they did, with the consciousness that the political and philosophicalaphorism of their
generation will, in the language of a great jurist, "be doubted by the next and perhaps entirely
discarded by the third." (Chief Justice Winslow in Gorgnis v. Falk Co., 147 Wis., 327; 133 N. W.,
209.) Embodying the spirit of the present epoch, general provisions were inserted in the
Constitution which are intended to bring about the needed social and economic equilibrium
between component elements of society through the application of what may be termed as
the justitia communis advocated by Grotius and Leibnits many years ago to be secured through
the counterbalancing of economic and social forces and opportunities which should be regulated,
if not controlled, by the State or placed, as it were, in custodia societatis. "The promotion of
social justice to insure the well-being and economic security of all the people' was thus inserted
as vital principle in our Constitution. (Sec. 5, Art. II, Constitution.) And in order that this
declaration of principle may not just be an empty medley of words, the Constitution in various
sections thereof has provided the means towards its realization. For instance, section 6 of Articles
XIII declares that the State "shall afford protection to labor, especially to working women and
minors, and shall regulated the relations between landowner and tenant, and between labor and
capital in industry and in agriculture." The same section also states that "the State may provide
for compulsory arbitration." In extraordinary cases mentioned in section 16, Articles VI, of the
Constitution, the President of the Philippines may be authorized by law, for a limited period and
subject to such restrictions as the National Assembly may prescribed, to "promulgate rules and
regulations to carry out a declared national policy." Albeit, almost at the same time the Congress
of the United States approved the National Labor Regulations Act (49 Stat., 449) on July 5, 1935,
commonly known as the Wagner Act, we were in the Philippines headway towards the adoption
of our fundamental law, pursuant to congressional authority given in the Tydings-McDuffie
Independence Act, approved March 24, 1934. In our Bill of Rights we now find the following
provision "The right to form associations or societies for purposes not contrary to law shall not be
abridged." (Par. 6, section 1, art. III, Constitution.) What was an agitation in the United States
which brought about the recommendation by the Commission on Industrial Relations created by
an Act of Congress in 1912 for the adoption of a Labor Bill of Rights as an amendment to the
United States Constitution is, in our case, virtually an accepted principle, which may be expanded
and vitalized by legislation to keep pace with the development of time and circumstances.

By and large, these provisions in our Constitution all evince and express the need of shifting
emphasis to community interest with a view to affirmative enhancement of human values. In
conformity with the constitutional objective and cognizant of the historical fact that industrial and
agricultural disputes had given rise to disquietude, bloodshed and revolution in our country, the
National Assembly enacted Commonwealth Act No. 103, entitled "An Act to afford protection of
labor by creating a Court of Industrial Relations empowered to fix minimum wages for laborers
and maximum rental to be paid tenants, and to enforce compulsory arbitration between employers
or landlords, and employees or tenants, respectively; and by prescribing penalties for the violation
of the orders" and, later, Commonwealth Act. No. 213, entitled, "An Act to define and regulate
legitimate labor organizations." (Asto this last act, vide "finding and policy," preamble [sec. 1]of
the Wagner Act [49 Sta., 449]).

Commonwealth Act No. 103, approved October 29, 1936, was originally Bill No. 700 of the
National Assembly. More light is shed by the explanatory statement of the Bill than by what
transpired in the course of the deliberation of the measure in the legislative chamber. "El presente
proyecto de ley," thus the explanatory statement of Bill No. 700, 'crea una Junta de Relaciones
Industriales . . . y provee el arbitraje obligatorio. . . de acuerdo con el Articulo 6, Titulo XIII de la
Constitucion, el provee que "El Estado podrs establacerel arbitraje obligatorio." "Incorporating
the conclusion reached by a committee appointed, a year or so before it was observed that 'bajo la
legislacion actual' " evidently referring to Act No. 4055 "no existe instrumento adecuado
para evitar las huelgas. El Departamentode Trabajo desempea maramente el papel de
pacificadorentre las partes en controversia y sus decisiones no sonobligatorias ni para los
patronos ni para los obreros. El pueblo la allegado a un grado de desarrollo industrial, quehace
imperiosa el que la intervencion del gobierno en estosconflictos sea mas efectiva . . . ." The
creation of a Court of Industrial Relations was thus proposed, endowed "no solamente del poder
de arbitrar sino tambien del deberde investigar, decidir, y hacer recomendaciones sobre las
cuestiones en conflicto y los problem as que afectan al Capitaly al Trabajo en la Industria y la
Agricultuta bajola direccion del Presidente de la Mancomunidad de Filipinaso a peticion del
Secretario del Trabajo.

xxx xxx xxx

From what has been stated, it appears that the legislation which are now called upon to construe
was enacted in pursuance of what appears to be deliberate embodiment of a new social policy,
founded on the conception of a society integrated not by independent individuals dealing at arms'
length, but by interdependent members of a consolidated whole whose interests must be protected
against mutual aggression and warfare among and between divers and diverse units which are
impelled by counter vailing and opposite individual and group interests, and this is particularly
true in the relationship between labor and capital. Social and industrial disturbances which fifty
years ago were feudal-like and of isolated importance may now well result in a serious strain
upon the entire economic organism of the nation . In the United States labor legislation has
undergone a long process of development too long to nature here, culminating in the enactments
of what were commonly known as the Clayton Act, the Norris-La Guardia Act, and finally, the
Wagner Act and the Fair Labor Standards Act of 1938. The Wagner Act created the National
Labor Relations Board as an instrumentality of the Federal Government in the settlement of labor
disputes, which device is aimed at the avoidance of unnecessary friction between labor and
capital and the establishment of industrial peace. Scrutiny of legislation in that country and of
pronouncement made by its Supreme Court reveals a continuous renovation and change made
necessary by the impact of changing needs and economic pressure brought about by the
irresistible momentum of new social and economic forces developed there. In the light of changes
that have occured, it is doubted if the pronouncement made by the said Supreme Court in 1905
(Lochner v. New York, 198, U.S., 45) or in 1908 (Adair v. U.S., 52 Law. ed. 430, 208 U.S., 161,
and Coppage v. Kansas, 236 U.S., 1) cases which are relied upon by the petitioner in its
printed memorandum still retain their virtuality at the present time. In the Philippines, social
legislation has had a similar development although of course to a much smaller degree and of
different adaptation giving rise to several attempts at meeting and solving our peculiar social and
economic problems. (See Commonwealth to the National Assembly, September 2,1936;
Executive Order No. 49, S. 1936). The system of voluntary arbitration devised by Act No. 4055
of the defunct Philippine Legislature has apparently been abandoned by the enactment of the
 aforementioned Commonwealth Acts Nos. 103 and 213. In the midst of changes that have taken
place, it may likewise be doubted if the pronouncement made by this court in the case of People
vs. Pomar (46 Phil., 440) also relied upon by the petitioner in its printed memorandum still
retains its virtually as a living principle. The policy of laissez faire has to some extent given way
the assumption by the government of the right of intervention even in contractual relations
affected with public interests.

xxx xxx xxx

In Commonwealth Act No. 103, and it, our Government no longer performs the role of a mere
mediator or intervenor but that of the supreme arbiter.

En su siguiente senalmiento de error la recurrentealega que la conducta del investigador, la investigacion

quepracticio y la manera como conocio del asunto el Tribunalde Relaciobes Industriales le privaron de
una vista i,parcialy justa, y constituyen privacion de supropiedad sinel debido proceso de ley. Para
demostrar la carencia de fundamento del senalmiento de error, creemos suficientereproducir a
continuacion la forma como se practicio la investigacion por el comisionado nombrado por el Tribunal de
Relacionbes Industriales y la manera como secelebro la vista por dicho tribunal, tal como se expone en
laorden del 6 de mayo de 1939.

Hearing was held on April 3, 1939, where witnessesfor both the petitioners and the respondent
testified. To supplement the facts brought out at the hearing, the Court ordered one of its Special
Agents to proceed to the premises of the mines to conduct a further investigation.

El comisionado fue nombrado por el Tribumal de RelacionesIndustriales en el su facultad conferidapor el

articulo 10 de la ley No. 103 de Commonwealth yel la inspeccion y vistas que celebraron el comisionado
y eltribunal, respectivamente, las partes estuvieron representadasdebidamente, fueron oidas y presentaron
las pruebasque tenian disponibles y creyeron conveniente ofrecerTales inspeccion y vistas tenian el
caracter de una vistajudicial imparcial y justa y constituyen el debido procesode ley que garantiza la
Constitucion.

Sostiene igualmente la recurrente que la orden del 6 demayo de 1939 es arbitraria porque no existen
pruebassubstanciales ni competentes que la sostengan. Sobre esteextremo, las conclusiones de hecho que
ha sentado el Tribunalde Relaciones Industriales demuestran que la ordenimpugnada esta sostenida por el
resultado de la investigacion practicada por el comisionado y las pruebas que laspartes presentaron
directamente ante el Tribunal. Endichas conclusiones se han considerado y analizado por elTribunal de
Relaciones Industriales todas las pruebas quelas partes presentaron y resulta inevitable la conclusionde
que la orden no es arbitraria y esta justificada y sotenida por los hechos probados.

El ultimo senalmiento de error guarda relacion conla parte de la orden del 6 mayo de 1939 que
disponeque la recurrente pague a los 55 obreros repustos losjornales que dejaron de percibir durante su
separaciondel servicio. La recurrente sostiene que esta parte dela orden equivale a una sentencia por
danos y perjuiciosque el Tribunal de Relaciones Industriales no puede pronunciar por carecer de
jurisdiccion. La pretension noes meritoria. El Tribunal de Relaciones Industriales,conforme ya se ha
dicho, es un tribunal especial y comotal tiene facultad para disponer que la recurrente paguelos jornales
de sus empleados y obreros que han sido repuestos.Los articulos 1 y 4 de la Ley No. 103 de
Commonwealth,segun ha sido enmendado el primero por elarticulo 1 de la Ley No. 254, confieren
facultad y jurisdiccion al tribunal de Relaciones Inbdustriales para conocer, resolver y decidir todas las
cuestiones, controversiasy disputas entre patronos y obreros y propietarios y terratenientes, y los jornales
de los obreros repuestos, duranteel tiempo en que fueron separados del servicio,esteban incluidos en las
controverias y disputas sometidasal Departamento del Trabajo y certificados por este al Tribunal de
Relaciones Industriales.

Se deniega el recurso de certiorari y se confiman laorden del 6 de mayo de 1939 y la resolucion del 17
deagosto del mismo ano, con las costas a la recurrente. Asise ordena.

Avancea, Diaz, Laurel y Moran, MM., estan conformes.

 FIRST DIVISION

[G.R. No. 47800. December 2, 1940.]

MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL., Respondents.

Maximo Calalang in his own behalf.

Solicitor General Ozaeta and Assistant Solicitor General Amparo for respondents Williams,
Fragante and Bayan

City Fiscal Mabanag for the other respondents.

SYLLABUS

1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF COMMONWEALTH ACT No. 648;

DELEGATION OF LEGISLATIVE POWER; AUTHORITY OF DIRECTOR OF PUBLIC WORKS
AND SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS TO PROMULGATE RULES
AND REGULATIONS. The provisions of section 1 of Commonwealth Act No. 648 do not confer
legislative power upon the Director of Public Works and the Secretary of Public Works and
Communications. The authority therein conferred upon them and under which they promulgated the rules
and regulations now complained of is not to determine what public policy demands but merely to carry
out the legislative policy laid down by the National Assembly in said Act, to wit, "to promote safe transit
upon, and avoid obstructions on, roads and streets designated as national roads by acts of the National
Assembly or by executive orders of the President of the Philippines" and to close them temporarily to any
or all classes of traffic "whenever the condition of the road or the traffic thereon makes such action
necessary or advisable in the public convenience and interest." The delegated power, if at all, therefore, is
not the determination of what the law shall be, but merely the ascertainment of the facts and
circumstances upon which the application of said law is to be predicated. To promulgate rules and
regulations on the use of national roads and to determine when and how long a national road should be
closed to traffic, in view of the condition of the road or the traffic thereon and the requirements of public
convenience and interest, is an administrative function which cannot be directly discharged by the
National Assembly. It must depend on the discretion of some other government official to whom is
confided the duty of determining whether the proper occasion exists for executing the law. But it cannot
be said that the exercise of such discretion is the making of the law.

2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY; GOVERNMENTAL AUTHORITY.

Commonwealth Act No. 548 was passed by the National Assembly in the exercise of the paramount
police power of the state. Said Act, by virtue of which the rules and regulations complained of were
promulgated, aims to promote safe transit upon and avoid obstructions on national roads, in the interest
and convenience of the public. In enacting said law, therefore, the National Assembly was prompted by
considerations of public convenience and welfare. It was inspired by a desire to relieve congestion of
traffic, which is, to say the least, a menace to public safety. Public welfare, then, lies at the bottom of the
enactment of said law, and the state in order to promote the general welfare may interfere with personal
liberty, with property, and with business and occupations. Persons and property may be subjected to all
 kinds of restraints and burdens, in order to secure the general comfort, health, and prosperity of the state
(U.S. v. Gomer Jesus, 31 Phil., 218). To this fundamental aim of our Government the rights of the
individual are subordinated. Liberty is a blessing without which life is a misery, but liberty should not be
made to prevail over authority because then society will fall into anarchy. Neither should authority be
made to prevail over liberty because then the individual will fall into slavery. The citizen should achieve
the required balance of liberty and authority in his mind through education and, personal discipline, so
that there may be established the resultant equilibrium, which means peace and order and happiness for
all. The moment greater authority is conferred upon the government, logically so much is withdrawn from
the residuum of liberty which resides in the people. The paradox lies in the fact that the apparent
curtailment of liberty is precisely the very means of insuring its preservation.

3. ID.; ID.; SOCIAL JUSTICE. Social justice is "neither communism, nor despotism, nor atomism,
nor anarchy," but the humanization of laws and the equalization of social and economic forces by the
State so that justice in its rational and objectively secular conception may at least be approximated. Social
justice means the promotion of the welfare of all the people, the adoption by the Government of measures
calculated to insure economic stability of all the competent elements of society, through the maintenance
of a proper economic and social equilibrium in the interrelations of the members of the community,
constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through
the exercise of powers underlying the existence of all governments on the time-honored principle of salus
populi est suprema lex. Social justice, therefore, must be founded on the recognition of the necessity of
interdependence among divers and diverse units of a society and of the protection that should be equally
and evenly extended to all groups as a combined force in our social and economic life, consistent with the
fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all
persons, and of bringing about "the greatest good to the greatest number."

DECISION

LAUREL, J.:

Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought before this
court this petition for a writ of prohibition against the respondents, A. D. Williams, as Chairman of the
National Traffic Commission; Vicente Fragante, as Director of Public Works; Sergio Bayan, as Acting
Secretary of Public Works and Communications; Eulogio Rodriguez, as Mayor of the City of Manila; and
Juan Dominguez, as Acting Chief of Police of Manila.

It is alleged in the petition that the National Traffic Commission, in its resolution of July 17, 1940,
resolved to recommend to the Director of Public Works and to the Secretary of Public Works and
Communications that animal-drawn vehicles be prohibited from passing along Rosario Street extending
from Plaza Calderon de la Barca to Dasmarias Street, from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m.
to 5:30 p.m.; and along Rizal Avenue extending from the railroad crossing at Antipolo Street to Echague
Street, from 7 a.m. to 11 p.m., from a period of one year from the date of the opening of the Colgante
Bridge to traffic; that the Chairman of the National Traffic Commission, on July 18, 1940 recommended
to the Director of Public Works the adoption of the measure proposed in the resolution aforementioned, in
pursuance of the provisions of Commonwealth Act No. 548 which authorizes said Director of Public
Works, with the approval of the Secretary of Public Works and Communications, to promulgate rules and
regulations to regulate and control the use of and traffic on national roads; that on August 2, 1940, the
Director of Public Works, in his first indorsement to the Secretary of Public Works and Communications,
recommended to the latter the approval of the recommendation made by the Chairman of the National
Traffic Commission as aforesaid, with the modification that the closing of Rizal Avenue to traffic to
animal-drawn vehicles be limited to the portion thereof extending from the railroad crossing at Antipolo
Street to Azcarraga Street; that on August 10, 1940, the Secretary of Public Works and Communications,
in his second indorsement addressed to the Director of Public Works, approved the recommendation of
the latter that Rosario Street and Rizal Avenue be closed to traffic of animal-drawn vehicles, between the
points and during the hours as above indicated, for a period of one year from the date of the opening of
the Colgante Bridge to traffic; that the Mayor of Manila and the Acting Chief of Police of Manila have
enforced and caused to be enforced the rules and regulations thus adopted; that as a consequence of such
enforcement, all animal-drawn vehicles are not allowed to pass and pick up passengers in the places
above-mentioned to the detriment not only of their owners but of the riding public as well.

It is contended by the petitioner that Commonwealth Act No. 548 by which the Director of Public Works,
with the approval of the Secretary of Public Works and Communications, is authorized to promulgate
rules and regulations for the regulation and control of the use of and traffic on national roads and streets is
unconstitutional because it constitutes an undue delegation of legislative power. This contention is
untenable. As was observed by this court in Rubi v. Provincial Board of Mindoro (39 Phil, 660, 700),
"The rule has nowhere been better stated than in the early Ohio case decided by Judge Ranney, and since
followed in a multitude of cases, namely: The true distinction therefore is between the delegation of
power to make the law, which necessarily involves a discretion as to what it shall be, and conferring an
authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first
cannot be done; to the latter no valid objection can be made. (Cincinnati, W. & Z. R. Co. v. Commrs.
Clinton County, 1 Ohio St., 88.) Discretion, as held by Chief Justice Marshall in Wayman v. Southard (10
Wheat., 1) may be committed by the Legislature to an executive department or official. The Legislature
may make decisions of executive departments or subordinate officials thereof, to whom it has committed
the execution of certain acts, final on questions of fact. (U.S. v. Kinkead, 248 Fed., 141.) The growing
tendency in the decisions is to give prominence to the necessity of the case."cralaw virtua1aw library

Section 1 of Commonwealth Act No. 548 reads as follows:jgc:.com.ph

"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets designated as
national roads by acts of the National Assembly or by executive orders of the President of the Philippines,
the Director of Public Works, with the approval of the Secretary of Public Works and Communications,
shall promulgate the necessary rules and regulations to regulate and control the use of and traffic on such
roads and streets. Such rules and regulations, with the approval of the President, may contain provisions
controlling or regulating the construction of buildings or other structures within a reasonable distance
from along the national roads. Such roads may be temporarily closed to any or all classes of traffic by the
Director of Public Works and his duly authorized representatives whenever the condition of the road or
the traffic thereon makes such action necessary or advisable in the public convenience and interest, or for
a specified period, with the approval of the Secretary of Public Works and Communications."cralaw
virtua1aw library

The above provisions of law do not confer legislative power upon the Director of Public Works and the
Secretary of Public Works and Communications. The authority therein conferred upon them and under
which they promulgated the rules and regulations now complained of is not to determine what public
policy demands but merely to carry out the legislative policy laid down by the National Assembly in said
Act, to wit, "to promote safe transit upon and avoid obstructions on, roads and streets designated as
national roads by acts of the National Assembly or by executive orders of the President of the
Philippines" and to close them temporarily to any or all classes of traffic "whenever the condition of the
road or the traffic makes such action necessary or advisable in the public convenience and interest." The
delegated power, if at all, therefore, is not the determination of what the law shall be, but merely the
ascertainment of the facts and circumstances upon which the application of said law is to be predicated.
To promulgate rules and regulations on the use of national roads and to determine when and how long a
national road should be closed to traffic, in view of the condition of the road or the traffic thereon and the
requirements of public convenience and interest, is an administrative function which cannot be directly
discharged by the National Assembly. It must depend on the discretion of some other government official
to whom is confided the duty of determining whether the proper occasion exists for executing the law.
But it cannot be said that the exercise of such discretion is the making of the law. As was said in Lockes
Appeal (72 Pa. 491): "To assert that a law is less than a law, because it is made to depend on a future
event or act, is to rob the Legislature of the power to act wisely for the public welfare whenever a law is
passed relating to a state of affairs not yet developed, or to things future and impossible to fully know."
The proper distinction the court said was this: "The Legislature cannot delegate its power to make the
law; but it can make a law to delegate a power to determine some fact or state of things upon which the
law makes, or intends to make, its own action depend. To deny this would be to stop the wheels of
government. There are many things upon which wise and useful legislation must depend which cannot be
known to the law-making power, and, must, therefore, be a subject of inquiry and determination outside
of the halls of legislation." (Field v. Clark, 143 U. S. 649, 694; 36 L. Ed. 294.)

In the case of People v. Rosenthal and Osmea, G.R. Nos. 46076 and 46077, promulgated June 12, 1939,
and in Pangasinan Transportation v. The Public Service Commission, G.R. No. 47065, promulgated June
26, 1940, this Court had occasion to observe that the principle of separation of powers has been made to
adapt itself to the complexities of modern governments, giving rise to the adoption, within certain limits,
of the principle of "subordinate legislation," not only in the United States and England but in practically
all modern governments. Accordingly, with the growing complexity of modern life, the multiplication of
the subjects of governmental regulations, and the increased difficulty of administering the laws, the
rigidity of the theory of separation of governmental powers has, to a large extent, been relaxed by
permitting the delegation of greater powers by the legislative and vesting a larger amount of discretion in
administrative and executive officials, not only in the execution of the laws, but also in the promulgation
of certain rules and regulations calculated to promote public interest.

The petitioner further contends that the rules and regulations promulgated by the respondents pursuant to
the provisions of Commonwealth Act No. 548 constitute an unlawful interference with legitimate
business or trade and abridge the right to personal liberty and freedom of locomotion. Commonwealth Act
No. 548 was passed by the National Assembly in the exercise of the paramount police power of the state.

Said Act, by virtue of which the rules and regulations complained of were promulgated, aims to promote
safe transit upon and avoid obstructions on national roads, in the interest and convenience of the public.
In enacting said law, therefore, the National Assembly was prompted by considerations of public
convenience and welfare. It was inspired by a desire to relieve congestion of traffic. which is, to say the
least, a menace to public safety. Public welfare, then, lies at the bottom of the enactment of said law, and
the state in order to promote the general welfare may interfere with personal liberty, with property, and
with business and occupations. Persons and property may be subjected to all kinds of restraints and
burdens, in order to secure the general comfort, health, and prosperity of the state (U.S. v. Gomez Jesus,
31 Phil., 218). To this fundamental aim of our Government the rights of the individual are subordinated.
Liberty is a blessing without which life is a misery, but liberty should not be made to prevail over
authority because then society will fall into anarchy. Neither should authority be made to prevail over
liberty because then the individual will fall into slavery. The citizen should achieve the required balance
of liberty and authority in his mind through education and personal discipline, so that there may be
established the resultant equilibrium, which means peace and order and happiness for all. The moment
greater authority is conferred upon the government, logically so much is withdrawn from the residuum of
liberty which resides in the people. The paradox lies in the fact that the apparent curtailment of liberty is
precisely the very means of insuring its preservation.
The scope of police power keeps expanding as civilization advances. As was said in the case of Dobbins
v. Los Angeles (195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise the police power is a continuing
one, and a business lawful today may in the future, because of the changed situation, the growth of
population or other causes, become a menace to the public health and welfare, and be required to yield to
the public good." And in People v. Pomar (46 Phil., 440), it was observed that "advancing civilization is
bringing within the police power of the state today things which were not thought of as being within such
power yesterday. The development of civilization, the rapidly increasing population, the growth of public
opinion, with an increasing desire on the part of the masses and of the government to look after and care
for the interests of the individuals of the state, have brought within the police power many questions for
regulation which formerly were not so considered."cralaw virtua1aw library

The petitioner finally avers that the rules and regulations complained of infringe upon the constitutional
precept regarding the promotion of social justice to insure the well-being and economic security of all the
people. The promotion of social justice, however, is to be achieved not through a mistaken sympathy
towards any given group. Social justice is "neither communism, nor despotism, nor atomism, nor
anarchy," but the humanization of laws and the equalization of social and economic forces by the State so
that justice in its rational and objectively secular conception may at least be approximated. Social justice
means the promotion of the welfare of all the people, the adoption by the Government of measures
calculated to insure economic stability of all the competent elements of society, through the maintenance
of a proper economic and social equilibrium in the interrelations of the members of the community,
constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through
the exercise of powers underlying the existence of all governments on the time-honored principle of salus
populi est suprema lex.

Social justice, therefore, must be founded on the recognition of the necessity of interdependence among
divers and diverse units of a society and of the protection that should be equally and evenly extended to
all groups as a combined force in our social and economic life, consistent with the fundamental and
paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of
bringing about "the greatest good to the greatest number."cralaw virtua1aw library

In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs against the
petitioner. So ordered.

Avancea, C.J., Imperial, Diaz. and Horrilleno. JJ. concur.

 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 77875 February 4, 1993

PHILIPPINE AIRLINES, INC., petitioner,

vs.
ALBERTO SANTOS, JR., HOUDIEL MAGADIA, GILBERT ANTONIO, REGINO DURAN,
PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION, and THE NATIONAL LABOR
RELATIONS COMMISSION, respondents.

Fortunato Gupit, Jr., Solon R. Garcia, Rene B. Gorospe, Bienvinodo T. Jamoralin, jr. and Paulino D.
Ungos, Jr. for petitioner.

Adolpho M. Guerzon for private respondents.

REGALADO, J.:

The instant petition for certiorari seeks to set aside the decision of The National Labor Relations
Commission (NLRC) in NLRC Case No. 4-1206-85, promulgated on December 11, 1986, 1 containing the
following disposition:

WHEREFORE, in view of the foregoing consideration, the Decision appealed from is set
aside and another one entered, declaring the suspension of complainants to be illegal and
consequently, respondent PAL is directed to pay complainants their salaries
corresponding to the respective period(s) of their suspension, and to delete the
disciplinary action from complainants' service records. 2

These material facts recited in the basic petition are virtually undisputed and we reproduce the same
hereunder:

1. Individual respondents are all Port Stewards of Catering Sub-Department, Passenger

Services Department of petitioner. Their duties and responsibilities, among others, are:

Prepares meal orders and checklists, setting up standard equipment in

accordance with the requirements of the type of service for each flight;
skiing, binning, and inventorying of Commissary supplies and
equipment.

2. On various occasions, several deductions were made from their salary. The deductions
represented losses of inventoried items charged to them for mishandling of company
properties . . . which respondents resented. Such that on August 21, 1984, individual
respondents, represented by the union, made a formal notice regarding the deductions to
petitioner thru Mr. Reynaldo Abad, Manager for Catering. . . .

3. As there was no action taken on said representation, private respondents filed a formal
grievance on November 4, 1984 pursuant to the grievance machinery Step 1 of the
Collective Bargaining Agreement between petitioner and the union. . . . The topics which
the union wanted to be discussed in the said grievance were the illegal/questionable
salary deductions and inventory of bonded goods and merchandise being done by
catering service personnel which they believed should not be their duty.

4. The said grievance was submitted on November 21, 1984 to the office of Mr. Reynaldo
Abad, Manager for Catering, who at the time was on vacation leave. . . .

5. Subsequently, the grievants (individual respondents) thru the shop steward wrote a
letter on December 5, 1984 addressed to the office of Mr. Abad, who was still on leave at
the time, that inasmuch as no reply was made to their grievance which "was duly
received by your secretary" and considering that petitioner had only five days to resolve
the grievance as provided for in the CBA, said grievance as believed by them (private
respondents) was deemed resolved in their favor. . . .

6. Upon Mr. Abad's return on December 7, 1984, he immediately informed the grievants
and scheduled a meeting on December 12, 1984. . . .

7. Thereafter, the individual respondents refused to conduct inventory works. Alberto

Santos, Jr. did not conduct ramp inventory on December 7, 10 and 12. Gilbert Antonio
did not conduct ramp inventory on December 10. In like manner, Regino Duran and
Houdiel Magadia did not conduct the same on December 10 and 12.

8. At the grievance meeting which was attended by some union representatives, Mr. Abad
resolved the grievance by denying the petition of individual respondents and adopted the
position that inventory of bonded goods is part of their duty as catering service personnel,
and as for the salary deductions for losses, he rationalized:

1. It was only proper that employees are charged for the amount due to
mishandling of company property which resulted to losses. However,
loss may be cost price 1/10 selling price.

9. As there was no ramp inventory conducted on the mentioned dates, Mr. Abad, on
January 3, 1985 wrote by an inter-office memorandum addressed to the grievants,
individual respondents herein, for them to explain on (sic) why no disciplinary action
should be taken against them for not conducting ramp inventory. . . .

10. The directive was complied with . . . . The reason for not conducting ramp inventory
was put forth as:

4. Since the grievance step 1 was not decided and no action was done by
your office within 5 days from November 21, 1984, per provision of the
PAL-PALEA CBA, Art. IV, Sec. 2, the grievance is deemed resolved in
PALEA's favor.
 11. Going over the explanation, Mr. Abad found the same unsatisfactory. Thus, a penalty
of suspension ranging from 7 days to 30 days were (sic) imposed depending on the
number of infractions committed. *

12. After the penalty of suspension was meted down, PALEA filed another grievance
asking for lifting of, or at least, holding in abeyance the execution of said penalty. The
said grievance was forthwith denied but the penalty of suspension with respect to
respondent Ramos was modified, such that his suspension which was originally from
January 15, 1985 to April 5, 1985 was shortened by one month and was lifted on March
5, 1985. The union, however, made a demand for the reimbursement of the salaries of
individual respondents during the period of their suspension.

13. Petitioner stood pat (o)n the validity of the suspensions. Hence, a complaint for illegal
suspension was filed before the
Arbitration Branch of the Commission, . . . Labor Arbiter Ceferina J. Diosana, on March
17, 1986, ruled in favor of petitioner by dismissing the complaint. . . . 3

Private respondents appealed the decision of the labor arbiter to respondent commission which rendered
the aforequoted decision setting aside the labor arbiter's order of dismissal. Petitioner's motion for
reconsideration having been denied, it interposed the present petition.

The Court is accordingly called upon to resolve the issue of whether or not public respondent NLRC
acted with grave abuse of discretion amounting to lack of jurisdiction in rendering the aforementioned
decision.

Evidently basic and firmly settled is the rule that judicial review by this Court in labor cases does not go
so far as to evaluate the sufficiency of the evidence upon which the labor officer or office based his or its
determination, but is limited to issues of jurisdiction and grave abuse of discretion. 4 It has not been
shown that respondent NLRC has unlawfully neglected the performance of an act which the law
specifically enjoins it to perform as a duty or has otherwise unlawfully excluded petitioner from the
exercise of a right to which it is entitled.

The instant case hinges on the interpretation of Section 2, Article IV of the PAL-PALEA Collective
Bargaining Agreement, (hereinafter, CBA), to wit:

Sec. 2 Processing of Grievances

xxx xxx xxx

STEP 1 Any employee who believes that he has a justifiable grievance shall take the
matter up with his shop steward. If the shop steward feels there is justification for taking
the matter up with the Company, he shall record the grievance on the grievance form
heretofore agreed upon by the parties. Two (2) copies of the grievance form properly
filled, accepted, and signed shall then be presented to and discussed by the shop steward
with the division head. The division head shall answer the grievance within five (5) days
from the date of presentation by inserting his decision on the grievance form, signing and
dating same, and returning one copy to the shop steward. If the division head fails to act
within the five (5)-day regl(e)mentary period, the grievance must be resolved in favor of
the aggrieved party. If the division head's decision is not appealed to Step II, the
 grievance shall be considered settled on the basis of the decision made, and shall not be
eligible for further appeal. 5(Emphasis ours.)

Petitioner submits that since the grievance machinery was established for both labor and management as a
vehicle to thresh out whatever problems may arise in the course of their relationship, every employee is
duty bound to present the matter before management and give the latter an opportunity to impose
whatever corrective measure is possible. Under normal circumstances, an employee should not preempt
the resolution of his grievance; rather, he has the duty to observe the status quo. 6

Citing Section 1, Article IV of the CBA, petitioner further argues that respondent employees have the
obligation, just as management has, to settle all labor disputes through friendly negotiations. Thus,
Section 2 of the CBA should not be narrowly interpreted. 7 Before the prescriptive period of five days
begins to run, two concurrent requirements must be met, i.e., presentment of the grievance and
its discussion between the shop steward and the division head who in this case is Mr. Abad. Section 2 is
not self-executing; the mere filing of the grievance does not trigger the tolling of the prescriptive period.8

Petitioner has sorely missed the point.

It is a fact that the sympathy of the Court is on the side of the laboring classes, not only because the
Constitution imposes such sympathy, but because of the one-sided relation between labor and
capital. 9 The constitutional mandate for the promotion of labor is as explicit as it is demanding. The
purpose is to place the workingman on an equal plane with management with all its power and
influence in negotiating for the advancement of his interests and the defense of his rights. 10 Under the
policy of social justice, the law bends over backward to accommodate the interests of the working class
on the humane justification that those with less privileges in life should have more privileges in law. 11

It is clear that the grievance was filed with Mr. Abad's secretary during his absence. 12 Under Section 2 of
the CBA aforequoted, the division head shall act on the grievance within five (5) days from the date of
presentation thereof, otherwise "the grievance must be resolved in favor of the aggrieved party." It is not
disputed that the grievants knew that division head Reynaldo Abad was then "on leave" when they filed
their grievance which was received by Abad's secretary. 13 This knowledge, however, should not prevent
the application of the CBA.

On this score, respondent NLRC aptly ruled:

. . . Based on the facts heretofore narrated, division head Reynaldo Abad had to act on the
grievance of complainants within five days from 21 November 1984. Therefore, when
Reynaldo Abad, failed to act within the reglementary period, complainants, believing in
good faith that the effect of the CBA had already set in, cannot be blamed if they did not
conduct ramp inventory for the days thereafter. In this regard, respondent PAL argued
that Reynaldo Abad was on leave at the time the grievance was presented. This, however,
is of no moment, for it is hard to believe that everything under Abad's authority would
have to stand still during his absence from office. To be sure, it is to be expected that
someone has to be left to attend to Abad's duties. Of course, this may be a product of
inadvertence on the part of PAL management, but certainly, complainants should not be
made to suffer the consequences. 14

Contrary to petitioner's submission, 15 the grievance of employees is not a matter which requires the
personal act of Mr. Abad and thus could not be delegated. Petitioner could at least have assigned an
officer-in-charge to look into the grievance and possibly make his recommendation to Mr. Abad. It is of
no moment that Mr. Abad immediately looked into the grievance upon returning to work, for it must be
remembered that the grievants are workingmen who suffered salary deductions and who rely so much on
their meager income for their daily subsistence and survival. Besides, it is noteworthy that when these
employees first presented their complaint on August 21, 1984, petitioner failed to act on it. It was only
after a formal grievance was filed and after Mr. Abad returned to work on December 7, 1984 that
petitioner decided to turn an ear to their plaints.

As respondent NLRC has pointed out, Abad's failure to act on the matter may have been due to
petitioner's inadvertence, 16 but it is clearly too much of an injustice if the employees be made to bear the
dire effects thereof. Much as the latter were willing to discuss their grievance with their employer, the
latter closed the door to this possibility by not assigning someone else to look into the matter during
Abad's absence. Thus, private respondents should not be faulted for believing that the effects of the CBA
in their favor had already stepped into the controversy.

If the Court were to follow petitioner's line of reasoning, it would be easy for management to delay the
resolution of labor problems, the complaints of the workers in particular, and hide under the cloak of its
officers being "on leave" to avoid being caught by the 5-day deadline under the CBA. If this should be
allowed, the workingmen will suffer great injustice for they will necessarily be at the mercy of their
employer. That could not have been the intendment of the pertinent provision of the CBA, much less the
benevolent policy underlying our labor laws.

ACCORDINGLY, on the foregoing premises, the instant petition is hereby DENIED and the assailed
decision of respondent National Labor Relations Commission is AFFIRMED. This judgment is
immediately executory.

SO ORDERED.

Narvasa, C.J., Feliciano, Nocon and Campos, Jr., JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 81958 June 30, 1988

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,

vs.
HON. FRANKLIN M. DRILON as Secretary of Labor and Employment, and TOMAS D.
ACHACOSO, as Administrator of the Philippine Overseas Employment
Administration, respondents.

Gutierrez & Alo Law Offices for petitioner.

SARMIENTO, J.:

The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a firm "engaged
principally in the recruitment of Filipino workers, male and female, for overseas placement," 1 challenges
the Constitutional validity of Department Order No. 1, Series of 1988, of the Department of Labor and
Employment, in the character of "GUIDELINES GOVERNING THE TEMPORARY SUSPENSION OF
DEPLOYMENT OF FILIPINO DOMESTIC AND HOUSEHOLD WORKERS," in this petition for
certiorari and prohibition. Specifically, the measure is assailed for "discrimination against males or
females;" 2 that it "does not apply to all Filipino workers but only to domestic helpers and females with
similar skills;" 3 and that it is violative of the right to travel. It is held likewise to be an invalid exercise of
the lawmaking power, police power being legislative, and not executive, in character.

In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the Constitution, providing
for worker participation "in policy and decision-making processes affecting their rights and benefits as
may be provided by law." 4 Department Order No. 1, it is contended, was passed in the absence of prior
consultations. It is claimed, finally, to be in violation of the Charter's non-impairment clause, in addition
to the "great and irreparable injury" that PASEI members face should the Order be further enforced.

On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of Labor and
Administrator of the Philippine Overseas Employment Administration, filed a Comment informing the
Court that on March 8, 1988, the respondent Labor Secretary lifted the deployment ban in the states of
Iraq, Jordan, Qatar, Canada, Hongkong, United States, Italy, Norway, Austria, and Switzerland. * In
submitting the validity of the challenged "guidelines," the Solicitor General invokes the police power of
the Philippine State.

It is admitted that Department Order No. 1 is in the nature of a police power measure. The only question
is whether or not it is valid under the Constitution.

The concept of police power is well-established in this jurisdiction. It has been defined as the "state
authority to enact legislation that may interfere with personal liberty or property in order to promote the
general welfare." 5 As defined, it consists of (1) an imposition of restraint upon liberty or property, (2) in
order to foster the common good. It is not capable of an exact definition but has been, purposely, veiled in
general terms to underscore its all-comprehensive embrace.

"Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it could
be done, provides enough room for an efficient and flexible response to conditions and circumstances thus
assuring the greatest benefits." 6

It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the Charter.
Along with the taxing power and eminent domain, it is inborn in the very fact of statehood and
sovereignty. It is a fundamental attribute of government that has enabled it to perform the most vital
functions of governance. Marshall, to whom the expression has been credited, 7 refers to it succinctly as
the plenary power of the State "to govern its citizens." 8

"The police power of the State ... is a power coextensive with self- protection, and it is not inaptly termed
the "law of overwhelming necessity." It may be said to be that inherent and plenary power in the State
which enables it to prohibit all things hurtful to the comfort, safety, and welfare of society." 9

It constitutes an implied limitation on the Bill of Rights. According to Fernando, it is "rooted in the
conception that men in organizing the state and imposing upon its government limitations to safeguard
constitutional rights did not intend thereby to enable an individual citizen or a group of citizens to
obstruct unreasonably the enactment of such salutary measures calculated to ensure communal peace,
safety, good order, and welfare." 10 Significantly, the Bill of Rights itself does not purport to be an
absolute guaranty of individual rights and liberties "Even liberty itself, the greatest of all rights, is not
unrestricted license to act according to one's will." 11 It is subject to the far more overriding demands and
requirements of the greater number.

Notwithstanding its extensive sweep, police power is not without its own limitations. For all its awesome
consequences, it may not be exercised arbitrarily or unreasonably. Otherwise, and in that event, it defeats
the purpose for which it is exercised, that is, to advance the public good. Thus, when the power is used to
further private interests at the expense of the citizenry, there is a clear misuse of the power. 12

In the light of the foregoing, the petition must be dismissed.

As a general rule, official acts enjoy a presumed vahdity. 13 In the absence of clear and convincing
evidence to the contrary, the presumption logically stands.

The petitioner has shown no satisfactory reason why the contested measure should be nullified. There is
no question that Department Order No. 1 applies only to "female contract workers," 14 but it does not
thereby make an undue discrimination between the sexes. It is well-settled that "equality before the law"
under the Constitution 15 does not import a perfect Identity of rights among all men and women. It admits
of classifications, provided that (1) such classifications rest on substantial distinctions; (2) they are
germane to the purposes of the law; (3) they are not confined to existing conditions; and (4) they apply
equally to all members of the same class. 16

The Court is satisfied that the classification made-the preference for female workers rests on
substantial distinctions.

As a matter of judicial notice, the Court is well aware of the unhappy plight that has befallen our female
labor force abroad, especially domestic servants, amid exploitative working conditions marked by, in not
a few cases, physical and personal abuse. The sordid tales of maltreatment suffered by migrant Filipina
workers, even rape and various forms of torture, confirmed by testimonies of returning workers, are
compelling motives for urgent Government action. As precisely the caretaker of Constitutional rights, the
Court is called upon to protect victims of exploitation. In fulfilling that duty, the Court sustains the
Government's efforts.

The same, however, cannot be said of our male workers. In the first place, there is no evidence that,
except perhaps for isolated instances, our men abroad have been afflicted with an Identical predicament.
The petitioner has proffered no argument that the Government should act similarly with respect to male
workers. The Court, of course, is not impressing some male chauvinistic notion that men are superior to
women. What the Court is saying is that it was largely a matter of evidence (that women domestic
workers are being ill-treated abroad in massive instances) and not upon some fanciful or arbitrary
yardstick that the Government acted in this case. It is evidence capable indeed of unquestionable
demonstration and evidence this Court accepts. The Court cannot, however, say the same thing as far as
men are concerned. There is simply no evidence to justify such an inference. Suffice it to state, then, that
insofar as classifications are concerned, this Court is content that distinctions are borne by the evidence.
Discrimination in this case is justified.

As we have furthermore indicated, executive determinations are generally final on the Court. Under a
republican regime, it is the executive branch that enforces policy. For their part, the courts decide, in the
proper cases, whether that policy, or the manner by which it is implemented, agrees with the Constitution
or the laws, but it is not for them to question its wisdom. As a co-equal body, the judiciary has great
respect for determinations of the Chief Executive or his subalterns, especially when the legislature itself
has specifically given them enough room on how the law should be effectively enforced. In the case at
bar, there is no gainsaying the fact, and the Court will deal with this at greater length shortly, that
Department Order No. 1 implements the rule-making powers granted by the Labor Code. But what should
be noted is the fact that in spite of such a fiction of finality, the Court is on its own persuaded that
prevailing conditions indeed call for a deployment ban.

There is likewise no doubt that such a classification is germane to the purpose behind the measure.
Unquestionably, it is the avowed objective of Department Order No. 1 to "enhance the protection for
Filipino female overseas workers" 17 this Court has no quarrel that in the midst of the terrible
mistreatment Filipina workers have suffered abroad, a ban on deployment will be for their own good and
welfare.

The Order does not narrowly apply to existing conditions. Rather, it is intended to apply indefinitely so
long as those conditions exist. This is clear from the Order itself ("Pending review of the administrative
and legal measures, in the Philippines and in the host countries . . ." 18), meaning to say that should the
authorities arrive at a means impressed with a greater degree of permanency, the ban shall be lifted. As a
stop-gap measure, it is possessed of a necessary malleability, depending on the circumstances of each
case. Accordingly, it provides:

9. LIFTING OF SUSPENSION. The Secretary of Labor and Employment (DOLE)

may, upon recommendation of the Philippine Overseas Employment Administration
(POEA), lift the suspension in countries where there are:

1. Bilateral agreements or understanding with the Philippines, and/or,

2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and
protection of Filipino workers. 19
The Court finds, finally, the impugned guidelines to be applicable to all female domestic overseas
workers. That it does not apply to "all Filipina workers" 20 is not an argument for unconstitutionality. Had
the ban been given universal applicability, then it would have been unreasonable and arbitrary. For
obvious reasons, not all of them are similarly circumstanced. What the Constitution prohibits is the
singling out of a select person or group of persons within an existing class, to the prejudice of such a
person or group or resulting in an unfair advantage to another person or group of persons. To apply the
ban, say exclusively to workers deployed by A, but not to those recruited by B, would obviously clash
with the equal protection clause of the Charter. It would be a classic case of what Chase refers to as a law
that "takes property from A and gives it to B." 21 It would be an unlawful invasion of property rights and
freedom of contract and needless to state, an invalid act. 22 (Fernando says: "Where the classification is
based on such distinctions that make a real difference as infancy, sex, and stage of civilization of minority
groups, the better rule, it would seem, is to recognize its validity only if the young, the women, and the
cultural minorities are singled out for favorable treatment. There would be an element of
unreasonableness if on the contrary their status that calls for the law ministering to their needs is made the
basis of discriminatory legislation against them. If such be the case, it would be difficult to refute the
assertion of denial of equal protection." 23 In the case at bar, the assailed Order clearly accords protection
to certain women workers, and not the contrary.)

It is incorrect to say that Department Order No. 1 prescribes a total ban on overseas deployment. From
scattered provisions of the Order, it is evident that such a total ban has hot been contemplated. We quote:

5. AUTHORIZED DEPLOYMENT-The deployment of domestic helpers and workers of

similar skills defined herein to the following [sic] are authorized under these guidelines
and are exempted from the suspension.

5.1 Hirings by immediate members of the family of Heads of State and

Government;

5.2 Hirings by Minister, Deputy Minister and the other senior

government officials; and

5.3 Hirings by senior officials of the diplomatic corps and duly

accredited international organizations.

5.4 Hirings by employers in countries with whom the Philippines have

[sic] bilateral labor agreements or understanding.

xxx xxx xxx

7. VACATIONING DOMESTIC HELPERS AND WORKERS OF SIMILAR SKILLS--

Vacationing domestic helpers and/or workers of similar skills shall be allowed to process
with the POEA and leave for worksite only if they are returning to the same employer to
finish an existing or partially served employment contract. Those workers returning to
worksite to serve a new employer shall be covered by the suspension and the provision of
these guidelines.

xxx xxx xxx

 9. LIFTING OF SUSPENSION-The Secretary of Labor and Employment (DOLE) may,
upon recommendation of the Philippine Overseas Employment Administration (POEA),
lift the suspension in countries where there are:

1. Bilateral agreements or understanding with the Philippines, and/or,

2. Existing mechanisms providing for sufficient safeguards to ensure the

welfare and protection of Filipino workers. 24

xxx xxx xxx

The consequence the deployment ban has on the right to travel does not impair the right. The right to
travel is subject, among other things, to the requirements of "public safety," "as may be provided by
law." 25 Department Order No. 1 is a valid implementation of the Labor Code, in particular, its basic
policy to "afford protection to labor," 26 pursuant to the respondent Department of Labor's rule-making
authority vested in it by the Labor Code. 27 The petitioner assumes that it is unreasonable simply because
of its impact on the right to travel, but as we have stated, the right itself is not absolute. The disputed
Order is a valid qualification thereto.

Neither is there merit in the contention that Department Order No. 1 constitutes an invalid exercise of
legislative power. It is true that police power is the domain of the legislature, but it does not mean that
such an authority may not be lawfully delegated. As we have mentioned, the Labor Code itself vests the
Department of Labor and Employment with rulemaking powers in the enforcement whereof. 28

The petitioners's reliance on the Constitutional guaranty of worker participation "in policy and decision-
making processes affecting their rights and benefits" 29 is not well-taken. The right granted by this
provision, again, must submit to the demands and necessities of the State's power of regulation.

The Constitution declares that:

Sec. 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for
all. 30

"Protection to labor" does not signify the promotion of employment alone. What concerns the
Constitution more paramountly is that such an employment be above all, decent, just, and humane. It is
bad enough that the country has to send its sons and daughters to strange lands because it cannot satisfy
their employment needs at home. Under these circumstances, the Government is duty-bound to insure that
our toiling expatriates have adequate protection, personally and economically, while away from home. In
this case, the Government has evidence, an evidence the petitioner cannot seriously dispute, of the lack or
inadequacy of such protection, and as part of its duty, it has precisely ordered an indefinite ban on
deployment.

The Court finds furthermore that the Government has not indiscriminately made use of its authority. It is
not contested that it has in fact removed the prohibition with respect to certain countries as manifested by
the Solicitor General.

The non-impairment clause of the Constitution, invoked by the petitioner, must yield to the loftier
purposes targetted by the Government. 31 Freedom of contract and enterprise, like all other freedoms, is
not free from restrictions, more so in this jurisdiction, where laissez faire has never been fully accepted as
a controlling economic way of life.

This Court understands the grave implications the questioned Order has on the business of recruitment.
The concern of the Government, however, is not necessarily to maintain profits of business firms. In the
ordinary sequence of events, it is profits that suffer as a result of Government regulation. The interest of
the State is to provide a decent living to its citizens. The Government has convinced the Court in this case
that this is its intent. We do not find the impugned Order to be tainted with a grave abuse of discretion to
warrant the extraordinary relief prayed for.

WHEREFORE, the petition is DISMISSED. No costs.

SO ORDERED.

Yap, C.J., Fernan, Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Cortes
and Grio-Aquino, JJ., concur.

Gutierrez, Jr. and Medialdea, JJ., are on leave.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-2216 January 31, 1950

DEE C. CHUAN & SONS, INC., petitioner,

vs.
THE COURT OF INDUSTRIAL RELATIONS, CONGRESS OF LABOR ORGANIZATIONS
(CLO), KAISAHAN NG MGA MANGGAGAWA SA KAHOY SA PILIPINAS and JULIAN
LUMANOG AND HIS WORK-CONTRACT LABORERS, respondents.

Quisumbing, Sycip and Quisumbing for petitioner.

Lazatin and Caballero for respondents.
Arsenio I. Martinez for the Court of Industrial Relations.

TUASON, J.:

Dee C. Chuan & Sons, Inc. assails the validity of an order of the Court of Industrial Relations. The order
made upon petitioner's request for authority to hire" about twelve(12) more laborers from time to time and
on a temporary basis," contains the proviso that "the majority of the laborers to be employed should be
native." The petition was filed pending settlement by the court of a labor dispute between the petitioner
and Kaisahan Ng Mga Manggagawa sa Kahoy sa Pilipinas.

At the outset, the appellant takes exception to the finding of the court below that Dee C. Chuan & Sons,
Inc. is capitalized with foreign descent. This question has little or no bearing on the case and may well be
passed over except incidentally as a point of argument in relation to the material issues.

It is next said that "The Court of Industrial Relations cannot intervene in questions of selection of
employees and workers so as to impose unconstitutional restrictions," and that "The restrictions of the
number of aliens that nay be employed in any business, occupation, trade or profession of any kind, is a
denial of the equal protection of the laws." Although the brief does not name the persons who are
supposed to be denied the equal protection of the laws, it is clearly to be inferred that aliens in general are
in petitioner's mind. certainly, the order does not, directly or indirectly, immediately or remotely,
discriminate against the petitioner on account of race or citizenship. The order could have been issued in a
case in which the employer was a Filipino. As a matter of fact the petitioner insists that 75 % of its shares
of stock are held by Philippine citizens, a statement which is here assumed to be correct.

But is petitioner entitled to challenge the constitutionality of a law or an order which does not adversely
affect it, in behalf of aliens who are prejudiced thereby? The answer is not in doubt. An alien may
question the constitutionality of a statute (or court order) only when and so far as it is being, or is about to
be, applied to his disadvantage. (16 C.J.S. 157 et seq.) The prospective employees whom the petitioner
may contemplate employing have not come forward to seek redress; their identity has not even been
revealed. Clearly the petitioner has no case in so far as it strives to protect the rights of others, much less
others who are unknown and undetermined. U.S. vs. Wong Ku Ark, 169 U.S. 649; Truax vs. Reich, 239
U.S. 39 60 Law ed., 131., and other American decisions cited do not support the petitioner for the very
simple reasons that in those cases it was the persons themselves whose rights and immunities under the
constitution were being violated that invoked the protection of the courts.
The petitioner is within its legitimate sphere of interest when it complains that the appealed order restrains
it in its liberty to engage the men it pleases. This complaint merits a more detailed examination.

That the employer's right to hire labor is not absolute has to be admitted. "This privilege of hiring and
firing ad libitum is, of course, being subjected to restraints today." Statutes are cutting in on it. And so
does Commonwealth Act No. 103. The regulations of the hours of labor of employees and of the
employment of women and children are familiar examples of the limitation of the employer's right in this
regard. The petitioner's request for permission to employ additional; laborers is an implicit recognition of
the correctness of the proposition. The power of the legislature to make regulations is subject only to the
condition that they should be affected with public interest and reasonable under the circumstances. The
power may be exercised directly by the law-making body or delegated by appropriate rules to the courts
or administrative agencies.

We are of the opinion that the order under consideration meets the test of reasonableness and public
interest. The passage of Commonwealth Act No. 103 was "in conformity with the constitutional objective
and . . . the historical fact that industrial and agricultural disputes have given rise to disquietude,
bloodshed and revolution in our country." (Antamok Goldfields Mining Co. vs. Court of Industrial
Relations, 40 Off. Gaz., 8th Supp., 173.)1"Commonwealth Act No. 103 has precisely vested the Court of
Industrial Relations with authority to intervene in all disputes between employees or strikes arising from
the difference as regards wages, compensation, and other labor conditions which it may take cognizance
of." (Central Azucarera de Tarlac vs. Court of Industrial Relations, 40 Off. Gaz., 3rd Supp., 319,
324.)2 Thus it has jurisdiction to determine the number of men to be laid off during off-seasons. By the
same token, the court may specify that a certain proportion of the additional laborers to be employed
should be Filipinos, if such condition, in the court's opinion, "is necessary or expedient for the purpose of
settling disputes or doing justice to the parties."

The order in question has that specific end in view. In parallel view the court observed: "Undoubtedly,
without the admonition of the Court, nothing could prevent petitioner from hiring purely alien laborers,
and there is no gainsaying the fact that further conflict or dispute would naturally ensue. To cope with this
contingency, and acting within the powers granted by the organic law, the court, believing in the necessity
and expediency of making patent its desire to avoid probable and possible further misunderstanding
between the parties, issued the order."

We are not prepared to declare that the order is not conducive to the aim pursued. The question is a
practical one depending on facts with which the court is best familiar. The fact already noted should not
be lost sight of that there is a pending strike and besides, that the employment of temporary laborers
was opposed by the striking employees and was the subject of a protracted hearing.

We can not agree with the petitioner that the order constitutes an unlawful intrusion into the sphere of
legislation, by attempting to lay down a public policy of the state or to settle a political question. In the
first place, we believe, as we have already explained, that the court's action falls within the legitimate
scope of its jurisdiction. In the second place, the order does not formulate a policy and is not political in
character. It is not a permanent, all-embracing regulation. It is a compromise and emergency measure
applicable only in this case and calculated to bridge a temporary gap and to adjust conflicting interests in
an existing and menacing controversy. The hiring of Chinese laborers by the petitioner was rightly
considered by the court likely to lead the parties away from the reconciliation which it was the function of
the court to effectuate.

As far as the petitioner is concerned, the requirement that majority of the laborers to be employed should
be Filipinos is certain not arbitrary, unreasonable or unjust. The petitioner's right to employ labor or to
make contract with respect thereto is not unreasonably curtailed and its interest is not jeopardized. We
take it that the nationality of the additional laborers to be taken in is immaterial to the petitioner. In its
application for permission to employ twelve temporary laborers it expressly says that these could be
Filipinos or Chinese. On the face of this statement, assuming the same to be sincere, the petitioner
objection to the condition imposed by the court would appear to be academic and a trifle.

We should not close without adverting to the fact that the petitioner does not so much as pretend that the
hiring of additional laborers is its prerogative as a matter of right. It seems to be conceded that during the
pendency of the dispute the petitioner could employ temporary laborers only with the permission of the
Court of Industrial Relations. The granting of the application thus lies within the sound judgment of the
court, and if the court could turn it down entirely, as we think it could, its authority to quality the
permission should be undeniable, provided only that the qualification is not arbitrary, against law, morals,
or established public policy, which it is not; it is an expedient and emergency step designed to relieve
petitioner's own difficulties. Also important to remember is that it is not compulsory on petitioner's part to
take advantage of the order. Being a permute petitioner is the sole judge of whether it should take the
order as it is, or leave it if it does not suit its interest to hire new laborers other than Chinese.

The order appealed from is affirmed with costs to this appeal against the petitioner-appellant.

Moran, C.J., Pablo, Padilla, and Torres, JJ., concur.

Separate Opinions

OZAETA, J., with whom concur PARAS, MONTEMAYOR, and REYES, JJ., dissenting:

During the trial of an industrial dispute between the petitioner and the respondent labor union, the former
applied to the Court of Industrial Relations for authority "to hire about twelve more laborers from time to
time and on a temporary basis, to be chosen by the petitioner from either Filipinos or Chinese." the court
granted the authority applied for but imposed as a condition that the majority of the twelve new laborers
to be hired "should be native and only a nominal percentage thereof alien." In imposing such condition
the court said:

The hiring of laborers who are not native or Filipino should be discouraged, as it is being
discouraged by this court. In these critical moments of unemployment, any competition of alien
and native labor would be destructive of our Nation that is in the making. By the act of God, this
nation is the Philippines, her soil is the patrimony of the Filipino people, and in this Philippine
soil the Filipino laborers must have priority and preference. No capitalistic management can
violate this written law, unless it wants to court trouble and conflict. In the hiring, therefore, of
laborers, it is the opinion of this court that management, in employing aliens, should be prudent
and cautious and should, as much as possible, employ only a small percentage thereof limited to
those absolutely necessary and confidential.

The power of the Court of Industrial Relations to impose such condition as to limit the authority of the
employer to hire laborers than Filipinos is challenged by the petitioner. "The petitioner is within its
legitimate sphere of interest when it complains that the appealed order restrains it in liberty to engage the
men it pleases," says the majority opinion, and we add "regardless of race or nationality." It is true that
no alien laborer who may be adversely affected by the order has been made a party herein. Under the
circumstances of the case he could not be expected to have intervened in the incident which gave rise to
the order complained of. But his intervention is not necessary in order to determine whether or not the
Court of Industrial Relations is empowered by law to impose the condition above mentioned. If the court
has no power to discriminate against a certain class of laborers on account of their race or nationality, it
has no power to impose the condition in question, and the employer has legitimate right to complain
against such imposition.

The Court of Industrial Relations impliedly admits the nonexistence of any statue providing that Filipino
laborers must be preferred over aliens; but it claims or adopts an "unwritten law" to that effect and says
that "no capitalistic management can violate this unwritten law, unless it wants to court trouble and
conflict." Who made such unwritten law? Certainly the Congress of the Philippines, the only entity
authorized by the Constitution to make laws, and which does not promulgate unwritten laws, did not do
so. The court, therefore, cannot take cognizance of, and much less apply, such supposed unwritten law.

It is sheer usurpation of legislative power for the court to enact or make laws. Its power is confined to
interpreting and applying the laws enacted by the legislature.

The case of Truax vs. Reich (600 law. ed., 131), which was decided by the Supreme Court of the United
States on November 1, 1915, is of pertinent and persuasive application to the question at issue in that, in
our opinion, it emphasizes the utter lack of power of the court to impose the condition here complained
of; for in said case Supreme Court of the United States ruled that the Legislature of the State of Arizona
could not validly enact a law similar to the supposed unwritten law which the Court of Industrial
Relations has conceived and has tried to enforce. The law involved in said case pertinently reads as
follows:

SEC. 1. Any company, corporation, partnership, association or individual who is, may hereafter
become, an employer of more than five (5) workers at any one time, in the state of Arizona,
regardless of kind or class of work, or sex of workers, shall employ not less than (80) per cent
qualified electors or native-born citizens of the United States or some subdivision thereof.

SEC. 2. Any company, corporation, partnership, association or individual, their agent or agents,
found guilty of violating any of the provisions of this act shall be subject to a fine of not less than
one hundred ($100) dollars, and imprisoned for not less than thirty (30) days.

Mike Raich, a native of Austria and an inhabitant of the State of Arizona, but not a qualified elector, was
employed as a cook by William Truax in his restaurant, where he had nine employees, of whom seven
were neither native-born citizens of the United States nor qualified electors. After the passage of said law
Raich was informed by his employer that because of its requirements and because of the fear of the
penalties that would be incurred in case of its violation, he would be discharged. Thereupon Raich sued
Truax and the Attorney General of Arizona to enjoin them from enforcing the law on the ground that it
was unconstitutional because it denied him the equal protection of the laws. Both the District Court and
the Supreme Court of the United States upheld his contention. The court said that the complainant was
entitled under the Fourteenth Amendment to the equal protection of the laws of Arizona. "These
provisions," said the court, "are universal in their application, to all person within the territorial
jurisdiction, without regard to any differences of race, of color, or of nationality; and the equal laws. . . .
The discrimination defined by the act does not pertain to the regulation or distribution of the public
domain, or of the common property or resources of the people of the state, the enjoyment of which may
be limited to its citizens as against both aliens and the citizens of other states." The court said further:
 It is sought to justify this act as an exercise of the power of the state to make reasonable
classifications in legislating to promote the health, safety, morals, and welfare of those within its
jurisdiction. But this admitted authority, with the broad range of legislative discretion that it
implies, does not go so far as to make it possible for the state to deny to lawful inhabitants,
because of their race or nationality, the ordinary means of earning a livelihood. It requires no
argument to show that the right to work for a living in the common occupations of the community
is of the very essence of the personal freedom and opportunity that it was the purpose of the
Amendment to secure. . . . If this could be refused solely upon the ground of race or nationality,
the prohibition of the denial to any person of the equal protection of the laws would be a barren
form of words. It is no answer to say, as it is argued, that the act proceeds upon the assumption
that 'the employment of aliens, unless restrained, was a peril to the public welfare. The
discrimination against aliens in the wide range of employments to which the acts relates is made
an end in itself, and thus the authority to deny to aliens, upon the mere fact of their alienage, the
right to obtain support in the ordinary fields of labor, is necessarily involved.

Our own Constitution contains a provision similar to the Fourteenth Amendment to the Constitution of
the United States. Section 1 of Article III provides:

No person shall be deprived of life, liberty, or property without due process of law, nor shall any
person be denied the equal protection of the laws.

It is patent that if the lawmaking body itself cannot validly enact the supposed unwritten law conceived or
adopted by the lower court, much less could the latter do so.

Section 13 of Commonwealth Act No. 103, invoked by the trial court and by majority of this court as
authorizing the imposition of the discriminatory condition contained in the order appealed from, reads as
follows:

SEC. 13. Character of the award. In making an award, order or decision, under the provision
of section four of this Act, the Court shall not be restricted to the specific relief claimed or
demands made by the parties to the industrial or agricultural dispute, but may include in the
award, order or decision any matter or determination which may be deemed necessary or
expedient for the purpose of setting the dispute or of preventing further industrial or agricultural
dispute.

As correctly stated by Judge Lanting of the lower court in his dissenting opinion:

The reference in the resolution of the majority to section 13 of Commonwealth Act No. 103,
authorizing this Court to include in its awards, orders or decisions "any matter or determination
which may be deemed necessary or expedient for the purpose of setting the dispute or of
preventing further . . . disputes", is farfetched. This provision certainly does not authorize this
Court to go beyond its prescribed powers and issue an order which grossly violates the
fundamental law. More specifically, it cannot make any ruling which will produce the effect of
discriminating against and oppressing a person or class of persons and deny them the equal
protection of the laws, aside from curtailing their individual freedom and their right to live.

As matter of fact the respondent labor union "manifested its conformity to the hiring of additional
laborers, provided that it be consulted by the petitioner and that it be given the privilege of recommending
the twelve new laborers that are to be hired." And Judge Roldan in his order overruled that proposition by
saying : "The stand taken by the respondent labor union is not correct, because it attempts to encroach
upon the prerogative of the company to determine and adopt its own policy in the selection of its
employees and workers, and the Court should only intervene in questions of this nature when there is
discrimination or retaliation on the part of the company, which has not been proven or even alleged in the
case bar (Manila Trading & Supply Co. vs. Judge Francisco Zulueta et al., G. R. No. 46853;1 Manila
Chauffeurs League vs. Bachrach Motor Co., G. R. No. 49138;2Pampanga Bus Co. vs. Pampanga Bus Co.
Employees' Union, G. R. No. 46739;3 National Labor Union vs. San Miguel Brewery, CIR case No. 26-V,
June 12, 1947)."

Thus the Court of Industrial Relations itself correctly held that the respondent labor union has no right to
encroach upon the prerogative of the company to determine and adopt its own policy in the selection of its
employees and workers, and that the court itself should not intervene in such selection because there was
no proof of discrimination or retaliation on the part of the company. Yet in the dispositive part of its order
the court not only intervenes in such selection but compels the company to discriminate against a certain
class of laborers. The inconsistency and illegality of the order appealed from are too patent fro argument.

To hold that the Court of Industrial Relations may, under section 13, impose any condition in its order or
award in order to prevent further industrial disputes, regardless of whether or not such condition is in
violation of law or of the Constitution, is, in our opinion, thinkable. It goes without saying that industrial
dispute must be settled in accordance with law and justice. Suppose that the members of a labor union
should demand of an employer that 80 per cent of the new laborers the latter may hire should be Filipinos,
or that all of them should be Tagalogs or Ilocanos, and should threaten to declare a strike unless such
demand be complied with; would the court be justified in granting such demand under section 13 on the
ground that by doing so it would prevent a or strike or lockout and settle an industrial dispute? The
negative answer can hardly be disputed, since unreasonableness or illegal demands should not be
countenanced by the court. Yet the affirmance by this Court of the order appealed from in effect
authorizes the Court of Industrial Relations hereafter to commit such arbitrariness.

For the foregoing reasons, we vote to modify the appealed order by eliminating therefrom the
discriminatory condition in question.
 [G.R. No. 133215. July 15, 1999]

PAGPALAIN HAULERS, INC., petitioner, vs. The HONORABLE CRESENCIANO B. TRAJANO,

in his official capacity as Secretary of Labor and Employment, the HONORABLE
RENATO D. PARUNGO, in his official capacity as the Med-Arbiter in DOLE Case No.
NCR-OD-M-9705-006, and the INTEGRATED LABOR ORGANIZATION (ILO-PHILS)
PAGPALAIN WORKERS UNION-ILO-PHILS. respondents.

DECISION
ROMERO, J.:

On May 14, 1997, respondent Integrated Labor Organization-Pagpalain Haulers Workers Union
(hereafter referred to as ILO-PHILS), in a bid to represent the rank-and-file drivers and helpers of
petitioner Pagpalain Haulers, Inc. (hereafter referred to as Pagpalain), filed a petition for certification
election with the Department of Labor and Employment. ILO-PHILS attached to the petition copies of its
charter certificate, its constitution and by-laws, its books of account, and a list of its officers and their
addresses.
On July 10, 1997, Pagpalain filed a motion to dismiss the petition, alleging that ILO-PHILS was not
a legitimate labor organization due to its failure to comply with the requirements for registration under the
Labor Code. Specifically, it claimed that the books of account submitted by ILO-PHILS were not verified
under oath by its treasurer and attested to by its president, a required by Rule II, Book V of the Omnibus
Rules Implementing the Labor Code.
In a reply dated August 4, 1997, ILO-PHILS dismissed Pagpalains claims, saying that Department
Order No. 9, Series of 1997 had dispensed with the requirement that a local or chapter of a national union
submit books of account in order to be registered with the Department of Labor and Employment.
Finding in favor of ILO-PHILS, the Med-Arbiter, on August 27, 1997, ordered the holding of
certification elections among the rank-and-file of Pagpalain Haulers. Pagpalain promptly appealed the
decision to the Secretary of Labor and Employment. It claimed that the Med-Arbiter had gravely abused
his discretion in allowing Department Order No. 9 to take precedence over a ruling of the Supreme
Court.Pagpalain cited Protection Technology v. Secretary, Department of Labor and
Employment[1] and Progressive Development Corporation v. Secretary of Labor[2] in support of its
contention.
Declaring Protection and Progressive to be inapplicable to the case before him, the Secretary, on
February 27, 1998, issued a resolution dismissing Pagpalains appeal. In his own words, [I]n these
aforementioned cases, the Supreme Court premised its ruling on the previous rules implementing the
Labor Code, particularly Book V, that provides the requirements for the registration of a local or chapter
of a federation or national union. With the issuance of Department Order No. 09 amending the rules
implementing Book V of the Code, the requirement on books of account no longer exists.[3]
Aggrieved by said resolution, Pagpalain now comes to this Court for relief claiming that the
Secretary of Labor acted without jurisdiction in issuing the questioned resolution. In support of its
proposition, it claims that:
1. DEPARTMENT ORDER NO. 9, SERIES OF 1997, ISSUED BY PUBLIC RESPONDENT
SECRETARY OF LABOR IS NULL AND VOID FOR BEING CONTRARY TO PUBLIC
POLICY LAID DOWN BY THE SUPREME COURT IN PROTECTION TECHNOLOGY,
INC. V. SECRETARY OF LABOR (G.R. NO. 117211, 1 MARCH 1995)
 AND PROGRESSIVE DEVELOPMENT CORP. V. SECRETARY OF LABOR (G.R. NO.
96425, 4 FEBRUARY 1992);
2. DEPARTMENT ORDER NO. 9, SERIES OF 1997, OF PUBLIC RESPONDENT
SECRETARY OF LABOR CANNOT ALTER THE REQUIREMENTS OF ARTICLES
241(H) AND (J) OF THE LABOR CODE OF THE PHILIPPINES, NOR CAN IT
PREVAIL OVER THE RULINGS OF THE SUPREME COURT, WHICH FORM PART
OF THE LAW OF THE LAND.
Pagpalains contentions are without merit.
Under Article 234 of the Labor Code, the requirements for registration of a labor organization is as
follows:

Art. 234. Requirements of registration. Any applicant labor organization, association or group of unions
or workers shall acquire legal personality and shall be entitled to the rights and privileges granted by law
to legitimate labor organizations upon issuance of the certificate of registration based on the following
requirements:

(a) Fifty pesos (P50.00) registration fee;

(b) The names of its officers, their addresses, the principal address of the labor organization, the minutes
of the organizational meetings and the list of the workers who participated in such meetings;

(c) The names of all its members comprising at least twenty percent (20%) of all the employees in the
bargaining unit where it seeks to operate;

(d) If the applicant union has been in existence for one or more years, copies of its annual financial
reports; and

(e) Four (4) copies of the constitution and by-laws of the applicant union, minutes of its adoption or
ratification, and the list of the members who participated in it.

As can be gleaned from the above, the Labor Code does not require the submission of books of
account in order for a labor organization to be registered as a legitimate labor organization. The
requirement that books of account be submitted as a requisite for a registration can be found only in Book
V of the Omnibus Rules Implementing the Labor Code, prior to its amendment by Department Order No.
9, Series of 1997. Specifically, the old Section 3(e), Rule II, of Book V provided that [t]he local or
chapter of a labor federation or national union shall have and maintain a constitution and by-laws, set of
officers and books of accounts. For reporting purposes, the procedure governing the reporting of
independently registered unions, federations or national unions shall be observed.
In Progressive Development Corporation, cited by Pagpalain, this Court held that the above-
mentioned procedure governing the reporting of independently registered unions refers to the certification
and attestation requirements contained in Article 235, paragraph 2. Article 235, paragraph 2 provides that
[a]ll requisite documents and papers shall be certified under oath by the secretary or the treasurer of the
organization, as the case may be, and attested to by its president; hence, in the above-mentioned case, we
ruled that in applications for registration by a local or chapter of a federation or national union, the
constitution and by-laws, set of officers and books of account submitted by said local or chapter must be
certified under oath by the secretary or treasurer and attested to by its president.
 Three years later, in Protection Technology v. Secretary of Labor, we amplified our ruling
in Progressive, saying that the non-submission of books of account certified by and attested to by the
appropriate officer is a ground for an employer to legitimately oppose a petition for certification election
filed by a local or chapter of a national union.
By virtue of Department Order No. 9, Series of 1997, however, the documents needed to be
submitted by a local or chapter have been reduced to the following:
(a) A charter certificate issued by the federation or national union indicating the creation or
establishment of the local/chapter;
(b) The names of the local/chapters officers, their addresses, and the principal office of the
local/chapter;
(c) The local/chapters constitution and by-laws; provided that where the local/chapters
constitution and by-laws is the same as that of the federation or national union, this fact shall
be indicated accordingly.

All the foregoing supporting requirements shall be certified under oath by the Secretary or Treasurer of
the local/chapter and attested by its President.[4]

Since the Department Order No. 9 has done away with the submission of books of account as a
requisite for registration, Pagpalains only recourse now is to have said order declared null and void. It
premises its case on the principles laid down in Progressive and Protection Technology. First, Pagpalain
maintains that Department Order No. 9 is illegal, allegedly because it contravenes the above-mentioned
rulings of this Court.Citing Article 8 of the Civil Code, which provides that [j]udicial decisions applying
or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines,
Pagpalain declares the two cases part of the law of the land which, under the third paragraph of Article 7
of the Civil Code,[5] may not be supplanted by mere regulation.
Second, it claims that dispensing with books of account contravenes public policy, citing Protection
Technology, as follows:

It is immaterial that the Union, having been organized for less than a year before the application for
registration with the BLR, would have had no real opportunity to levy and collect dues and fees from its
members which need to be recorded in the books of account. Such accounting books can and must be
submitted to the BLR, even if they contain no detailed or extensive entries as yet. The point to be stressed
is that the applicant local or chapter must demonstrate to the BLR that it is entitled to registered status
because it has in place a system for accounting for members contributions to its fund even before it
actually receives dues and fees from its members. The controlling intention is to minimize the risk of
fraud and diversion in the course of the subsequent formation and growth of the Union
fund.[Underscoring petitioners]

To buttress its argument, Pagpalain also cites Progressive, thus:

The employer naturally needs assurance that the union it is dealing with is a bona fide organization, one
which has not submitted false statements or misrepresentations to the Bureau. The inclusion of the
certification and attestation requirements will in a marked degree allay these apprehensions of
management. Not only is the issuance of any false statement and misrepresentation a ground for
cancellation of registration (See Article 239(a), (c) and (d)); it is also a ground for a criminal charge of
perjury.
The certification and attestation requirements are preventive measures against the commission of
fraud.They likewise afford a measure of protection to unsuspecting employees who may be lured into
joining unscrupulous or fly-by-night unions whose sole purpose is to control union funds or to use the
union for dubious ends. [Underscoring petitioners]

Finally, Pagpalain cites as indicative of public policy, the following sections of Article 241 of the
Labor Code:

The following are the rights and conditions of membership in a labor organization:

xxx xxx xxx

(h) Every payment of fees, dues, or other contributions by a member shall be evidenced by a receipt
signed by the officer or agent making the collection and entered into the record of the organization to be
kept and maintained for that purpose;

xxx xxx xxx

(j) Every income or revenue of the organization shall be evidenced by a record showing its source, and
every expenditure of its funds shall be evidenced by a receipt from the person to whom the payment is
made, which shall state the date, place and purpose of such payment.Such record or receipt shall form part
of the financial records of the organization. [Underscoring petitioners]

Under Article 8 of the Civil Code, [j]udicial decisions applying or interpreting the laws or the
Constitution shall form a part of the legal system of the Philippines. This does not mean, however, that
courts can create law. The courts exist for interpreting the law, not for enacting it. To allow otherwise
would be violative of the principle of separation of powers, inasmuch as the sole function of our courts is
to apply or interpret the laws, particularly where gaps or lacunae exist or where ambiguities becloud
issues, but it will not arrogate unto itself the task of legislating.
Consequently, Progressive and ProtectionTechnology are not to be deemed as laws on the
registration of unions. They merely interpret and apply the implementing rules of the Labor Code as to
registration of unions. It is this interpretation that forms part of the legal system of the Philippines, for the
interpretation placed upon the written law by a competent court has the force of
law.[6] Progressive and Protection Technology, however, applied and interpreted the then existing Book V
of the Omnibus Rules Implementing the Labor Code. Since Book V of the Omnibus Rules, as amended
by Department Order No. 9, no longer requires a local or chapter to submit books of accounts as a
prerequisite for registration, the doctrines enunciated in the above-mentioned cases, with respect to books
of account, are already passe and therefore, no longer applicable. Hence, Pagpalain cannot insist that ILO-
PHILS comply with the requirements prescribed in said rulings, for the current implementing rules have
deleted the same.
Neither can Pagpalain contend that Department Order No. 9 is an invalid exercise of rule-making
power by the Secretary of Labor. For an administrative order to be valid, it must (i) be issued on the
authority of law and (ii) it must not be contrary to the law and Constitution.[7]
Department Order No. 9 has been issued on authority of law. Under the law, the Secretary is
authorized to promulgate rules and regulations to implement the Labor Code. Specifically, Article 5 of the
Labor Code provides that [t]he Department of Labor and other government agencies charged with the
administration and enforcement of this Code or any of its parts shall promulgate the necessary
implementing rules and regulations. Consonant with this article, the Secretary of Labor and Employment
promulgated the Omnibus Rules Implementing the Labor Code. By virtue of this self-same authority, the
Secretary amended the above-mentioned omnibus rules by issuing Department Order No. 9, Series of
1997.
Moreover, Pagpalain has failed to show that Department Order No. 9 is contrary to the law or the
Constitution. At the risk of being repetitious, the Labor Code does not require a local or chapter to submit
books of account in order for it to be registered as a legitimate labor organization. There is, thus, no
inconsistency between the Labor Code and Department Order No. 9. Neither has Pagpalain shown that
said order contravenes any provision of the Constitution.
Pagpalain cannot also allege that Department Order No. 9 is violative of public policy. As adverted
to earlier, the sole function of our courts is to apply or interpret the laws.[8] It does not formulate public
policy, which is the province of the legislative and executive branches of government. It cannot, thus, be
said that the principles laid down by the court in Progressive and Protection Technology constitute public
policy on the matter. They do, however, constitute the Courts interpretation of public policy, as
formulated by the executive department through its promulgation of rules implementing the Labor
Code.However, this public policy has itself been changed by the executive department, through the
amendments introduced in Book V of the Omnibus Rules by Department Order No. 9. It is not for us to
question this change in policy, it being a well-established principle beyond question that it is not within
the province of the courts to pass judgment upon the policy of legislative or executive
action.[9]Notwithstanding the expanded judicial power under Section 1, Article VIII of the Constitution,
an inquiry on the above-stated policy would delve into matters of wisdom not within the powers of this
Court.
Furthermore, the controlling intention in requiring the submission of books of account is the
protection of labor through the minimization of the risk of fraud and diversion in the handling of union
funds. As correctly pointed out by the Solicitor General, this intention can still be realized through other
provisions of the Labor Code. Article 241 of the Labor Code, for instance:

Art. 241. Rights and conditions of membership in a labor organization The following are the rights and
conditions of membership in a labor organization:

xxx xxx xxx

(b) The members shall be entitled to full and detailed reports from their officers and representatives of all
financial transactions as provided for in the constitution and by-laws of the organization;

xxx xxx xxx

(g) No officer, agent or member of a labor organization shall collect any fees, dues, or other contributions
in its behalf or make any disbursement of its funds unless he is duly authorized pursuant to its constitution
and by-laws;

(h) Every payment of fees, dues, or other contributions by a member shall be evidenced by a receipt
signed by the officer or agent making the collection and entered into the record of the organization to be
kept and maintained for the that purpose;

(i) The funds of the organization shall not be applied for any purpose or object other than those expressly
provided by its constitution or by-laws or those expressly authorized by written resolution adopted by the
majority of the members at a general meeting duly called for the purpose;
(j) Every income or revenue of the organization shall be evidenced by a record showing its source, and
every expenditure of its funds shall be evidenced by a receipt from the person to whom the payment is
made, which shall state the date, place and purpose of such payment.Such record or receipt shall form part
of the financial records of the organization.

xxx xxx xxx

(l) The treasurer of any labor organization and every officer thereof who is responsible for the account of
such organization or for the collection, management, disbursement, custody or control of the fund,
moneys and other properties of the organization, shall render to the organization and to its members a true
and correct account of all the moneys received and paid by him since he assumed office or since the last
day on which he rendered such account, and of all bonds, securities and other properties of the
organization entrusted to his custody or under his control. The rendering of such account shall be made:

(1) At least once a year within 30 days after the close of its fiscal year;
(2) At such other times as may be required by a resolution of the majority of the members of the
organization;
(3) Upon vacating his office.

The account shall be duly audited and verified by affidavit and a copy thereof shall be furnished the
Secretary of Labor.

(m) The books of account and other records of the financial activities of any labor organization shall be
open to inspection by any officer or member thereof during office hours;

xxx xxx xxx

Furthermore, Article 274 of the Labor Code empowers the Secretary of Labor or his duly authorized
representative to inquire into the financial activities of legitimate labor organizations upon the filing of a
complaint under oath duly supported by the written consent of 20% of the total membership of the labor
organization concerned, as well as to examine their books of accounts and other records to determine
compliance or non-compliance with the law. All of these provisions are designed to safeguard the funds
of a labor organization that they may not be squandered or frittered away by its officers or by third
persons to the detriment of its members.
Lastly, Department Order No. 9 only dispenses with books of account as a requirement for
registrationof a local or chapter of a national union or federation.As provided by Article 241 (h) and (j), a
labor organization must still maintain books of account, but it need not submit the same as a requirement
for registration. Given the foregoing disquisition, we find no cogent reason to declare Department Order
No. 9 null and void, as well as to reverse the assailed resolution of the Secretary of Labor.
WHEREFORE, premises considered, the instant petition is hereby DISMISSED for lack of merit
and the resolution of the Secretary of Labor dated February 27, 1998 AFFIRMED. Costs against
petitioner.
SO ORDERED.
Vitug, Panganiban, Purisima, and Gonzaga_Reyes, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 167708 August 22, 2008

THE HON. SECRETARY OF LABOR AND EMPLOYMENT, EDGARDO M. AGAPAY and

SAMILLANO A. ALONSO, JR., petitioners,
vs.
PANAY VETERANS SECURITY AND INVESTIGATION AGENCY, INC. and JULITO
JALECO,1respondent.

DECISION

CORONA, J.:

This is a petition for review2 of the November 25, 2004 amended decision3 of the Court of Appeals (CA)
in CA-G.R. SP No. 72713.

Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr.4 were hired by respondent Panay Veterans
Security and Investigation Agency, Inc. as security guards sometime in 1988. They were stationed at the
plant site of Food Industries, Inc. (FII) in Sta. Rosa, Laguna until FII terminated its contract with
respondent security agency on July 6, 2000. They were not given new assignments and their benefits
(including 13th month pay, overtime pay and holiday pay as well as wage differentials due to
underpayment of wages) were withheld by respondent security agency. This prompted them to file a
complaint for violation of labor standards in the regional office of the Department of Labor and
Employment in the National Capital Region (DOLE-NCR).

Acting on the complaint, Manuel M. Cayabyab, a labor employment officer of the DOLE-NCR,
conducted an inspection of respondent security agency on October 30, 2000. During the inspection,
respondent security agency failed to present its payroll as well as the daily time records submitted by
petitioners Agapay and Alonso, Jr. Such failure was noted as a violation.

After conducting his inspection, Cayabyab issued a notice of inspection to respondent security agency
through its authorized representative, respondent Julito Jaleco.5 Cayabyab explained the contents and
significance of the notice to respondent Jaleco. He emphasized the need for respondents either to comply
with labor standards by paying the claims of petitioners Agapay and Alonso, Jr. (as computed by
Cayabyab) or to raise any question regarding the notice to the DOLE-NCR within five days.

Respondents neither paid the claims of petitioners Agapay and Alonso, Jr. nor questioned the labor
employment officers findings. Thus, in his May 10, 2001 order, the Regional Director of the DOLE-
NCR adopted the findings and computation of Cayabyab as to the unpaid benefits due to petitioners
Agapay and Alonso, Jr. The dispositive portion of the order read:

WHEREFORE, premises considered, Panay Veterans Security and Investigation Agency, Inc.
and/or Julius Jaleco [are/]is hereby ordered to pay Edgardo Agapay, [et al.] the aggregate amount
of P206,569.20 representing 13th month, overtime and legal holiday [pay] & [underpaid] wages
within ten (10) days from receipt hereof.
 Otherwise, a [w]rit of [e]xecution shall be issued for the enforcement of [this] order.

SO ORDERED.6

Respondents moved for reconsideration but the DOLE-NCR Regional Director denied it.

Undeterred, respondents filed an appeal (with motion to reduce cash or surety bond) to the Secretary of
Labor and Employment. In his July 9, 2002 order, the Secretary of Labor and Employment found that
respondents failed to perfect their appeal since they did not post a cash or surety bond equivalent to the
monetary award. Thus, the appeal was dismissed and the DOLE-NCR Regional Directors May 10, 2001
order was declared final and executory. The Secretary of Labor and Employment denied reconsideration.

Respondents assailed the Secretary of Labor and Employments July 9, 2002 order via a petition for
certiorari in the CA. The CA initially dismissed the petition for lack of merit and ordered respondents to
pay a total recomputed amount of P224,603.26.7 However, the CA granted reconsideration by applying
the following ruling in Star Angel Handicraft v. National Labor Relations Commission8(NLRC) by
analogy:

Inasmuch as in practice, the NLRC allows the reduction of the appeal bond upon motion of
appellant and on meritorious grounds, it follows that a motion to that effect may be filed within
the reglementary period for appealing. Such motion may be filed in lieu of a bond which amount
is being contested. In the meantime, the appeal is not deemed perfected and the Labor Arbiter
retains jurisdiction over the case until the NLRC has acted on the motion and appellant has filed
the bond as fixed by the NLRC.

Thus, the CA amended its decision and allowed respondents to pursue their appeal.9 The Secretary of
Labor and Employment moved for reconsideration but it was denied. Thus, this petition.

The Secretary of Labor and Employment contends that respondents failed to perfect their appeal in the
manner prescribed by the Labor Code. He further asserts that a motion to reduce the appeal bond is not
allowed by the Labor Code and the Rules of Disposition of Labor Standards Cases in the Regional
Offices (Rules on the Disposition of Labor Standards Cases) and does not suspend the period of appeal.
Moreover, the rules of procedure of the NLRC do not apply in this case.

We uphold the Secretary of Labor and Employment.

Respondents Failed to
Perfect Their Appeal

Article 128 of the Labor Code provides:

ART. 128. Visitorial and enforcement power.

(a) The Secretary of Labor or his duly authorized representatives, including labor regulation
officers, shall have access to employers records and premises at any time of the day or night
whenever work is being undertaken therein, and the right to copy therefrom, to question any
employee and investigate any fact, condition or matter which may be necessary to determine
violations or which may aid in the enforcement of this Code and of any labor law, wage order or
rules and regulations issued pursuant thereto.
 (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in
cases where the relationship of employer-employee exists, the Secretary of Labor and
Employment or his duly authorized representatives shall have the power to issue compliance
orders to give effect to the labor standards provisions of this Code and other labor legislation
based on the findings of labor employment and enforcement officers or industrial safety engineers
made in the course of inspection. The Secretary or his duly authorized representatives shall issue
writs of execution to the appropriate authority for the enforcement of their orders, except in cases
where the employer contests the finding of the labor employment and enforcement officer and
raises issues supported by documentary proofs which were not considered in the course of
inspection.

An order issued by the duly authorized representative of the Secretary of Labor and Employment
under this Article may be appealed to the latter. In case said order involves a monetary award,
an appeal by the employer may be perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the Secretary of Labor and
Employment in the amount equivalent to the monetary award in the order appealed from.
(emphasis supplied)

In this connection, this Court ruled in Guico, Jr. v. Hon. Quisumbing:10

Article 128(b) of the Labor Code clearly provides that the appeal bond must be "in the amount
equivalent to the monetary award in the order appealed from." The records show that petitioner
failed to post the required amount of the appeal bond. His appeal was therefore not perfected.

The rule is that, to perfect an appeal of the Regional Directors order involving a monetary award in cases
which concern the visitorial and enforcement powers of the Secretary of Labor and Employment, the
appeal must be filed and the cash or surety bond equivalent to the monetary award must be posted within
ten calendar days from receipt of the order.11 Failure either to file the appeal or post the bond within the
prescribed period renders the order final and executory.

The legislative intent to make the bond an indispensable requisite for the perfection of an appeal by the
employer is underscored by the provision that "an appeal by the employer may be perfected only upon the
posting of a cash or surety bond."12 The word "only" makes it clear that the lawmakers intended the
posting of a cash or surety bond by the employer to be the exclusive means by which an employers
appeal may be perfected.13 In one case, we held that:

Anent the issue of whether or not the respondent Secretary of Labor acted with grave abuse of
discretion in dismissing petitioners appeal on the ground that petitioner failed to post the
required cash or surety bond, we rule in the negative.

Article 128 of the Labor Code likewise explicitly provides that in case an order issued by the
duly authorized representative of the Secretary of Labor and Employment involves a
monetary award, an appeal by the employer may be perfected only upon posting of a cash
or surety bond in an amount equivalent to the monetary award in the order appealed from.

As correctly noted by the Office of the Solicitor General, since the Order appealed from
involves a monetary award, an appeal by petitioner may be perfected only upon posting of a
cash or surety bond issued by a reputable bonding company duly accredited by respondent
Secretary of Labor in the amount equivalent to the monetary award in the Order appealed
from.
 It is undisputed that petitioner herein did not post a cash or surety bond when it filed its appeal
with the Office of respondent Secretary of Labor. Consequently, petitioner failed to perfect its
appeal on time and the Order of respondent Regional Director became final and executory.

Thus, the Secretary of Labor and Employment thru Undersecretary Cresenciano B. Trajano
correctly dismissed petitioners appeal.14 (emphasis supplied)

In this case, respondents admit that they failed to post the required bond when they filed their appeal to
the Secretary of Labor and Employment. Because of such failure, the appeal was never perfected and the
May 10, 2001 order of the DOLE-NCR Regional Director attained finality.

Motion To Reduce Appeal Bond Is Not Allowed In Appeals To The Secretary Of Labor

The jurisdiction of the NLRC is separate and distinct from that of the Secretary of Labor and
Employment. In the exercise of their respective jurisdictions, each agency is governed by its own rules of
procedure. In other words, the rules of procedure of the NLRC are different from (and do not apply in)
cases cognizable by the Secretary of Labor and Employment.

Unlike the New Rules of Procedure of the NLRC,15 no provision in the Rules on the Disposition of Labor
Standards Cases governs the filing of a motion for the reduction of the amount of the bond. However, on
matters that are not covered by the Rules on the Disposition of Labor Standards Cases, the suppletory
application of the Rules of Court is authorized.16 In other words, the Rules on the Disposition of Labor
Standards Cases does not sanction the suppletory resort to the rules of procedure of the NLRC.

By ruling that the rules of procedure of the NLRC should be applied suppletorily to respondents appeal
to the Secretary of Labor of Employment, the CA effectively amended the Rules on the Disposition of
Labor Standards Cases. In the process, it encroached on the rule-making power of the Secretary of Labor
and Employment.

The CAs amended decision also contradicted the spirit that animates all labor laws, the promotion of
social justice and the protection of workers. The posting of a cash or surety bond to perfect an appeal of
an order involving a monetary award has a two-fold purpose: (1) to assure the employee that, if he finally
prevails in the case, the monetary award will be given to him upon dismissal of the employers appeal and
(2) to discourage the employer from using the appeal to delay or evade payment of his obligations to the
employee.17 The CA disregarded these pro-labor objectives when it treated respondents failure to post the
required bond with undue leniency. The CA should have resolved any doubt in the implementation and
interpretation of the Labor Code and its implementing rules in favor of labor.18 For like all laws which
govern industrial relations (assuming all things are equal), the rules governing the proceedings in labor
disputes should be interpreted in favor of the worker.

Moreover, Star Angel Handicraft permitted the filing of a motion for reduction of the appeal bond
because the Court recognized the NLRCs existing practice at that time to allow the reduction of the
appeal bond "upon motion of appellant and on meritorious grounds." In fact, the practice was
subsequently institutionalized in the rules of procedure of the NLRC which now allow the reduction of
the amount of the bond "in justifiable cases and upon motion of the appellant."19 On the contrary, no such
practice ever existed in cases taken cognizance of by the Secretary of Labor and Employment in the
exercise of his visitorial and enforcement powers. Hence, Star Angel Handicraft cannot be applied in
labor standards cases appealed to the Secretary of Labor and Employment.
In ruling that Star Angel Handicraft was applicable by analogy to appeals to the Secretary of Labor and
Employment in cases involving his visitorial and enforcement powers, the CA effectively reversed Guico,
Jr. and Allied Investigation Bureau, Inc. v. Secretary of Labor,20 thus arrogating to itself a power that it
did not possess, a power only this Court sitting en banc may exercise.21 For this reason, the amended
decision was invalid as it was rendered by the CA in excess of its jurisdiction.

Monetary Award Is
Subject to Legal Interest

In Eastern Shipping Lines, Inc. v. Court of Appeals,22 the Court laid down the following guidelines:

I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or
quasi-delicts, is breached, the contravenor can be held liable for damages. The provisions under
Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable
damages.

II. With regard particularly to an award of interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows: a

1. When the obligation is breached, and it consists in the payment of a sum of

money, i.e., a loan or forbearance of money, the interest due should be that which may
have been stipulated in writing. Furthermore, the interest due shall itself earn legal
interest from the time it is judicially demanded. In the absence of stipulation, the rate of
interest shall be 12% per annum to be computed from default, i.e., from judicial or
extrajudicial demand under and subject to the provisions of Article 1169 of the Civil
Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an

interest on the amount of damages awarded may be imposed at the discretion of the
court at the rate of 6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages except when or until the demand can be established with
reasonable certainty. Accordingly, where the demand is established with reasonable
certainty, the interest shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably
established at the time the demand is made, the interest shall begin to run only from the
date the judgment of the court is made (at which time the quantification of damages may
be deemed to have been reasonably ascertained). The actual base for the computation of
legal interest shall, in any case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph
2, above, shall be 12% per annum from such finality until its satisfaction, this interim
period being deemed to be by then an equivalent to a forbearance of credit.

The obligation of respondents to pay the lawful claims of petitioners Agapay and Alonso, Jr. was
established with reasonable certainty on October 30, 2000 when respondents received the notice of
inspection from the labor employment officer. Since such obligation did not constitute a loan or
forbearance of money, it was subject to legal interest at the rate of 6% per annum from that date until the
May 10, 2001 order of the DOLE-NCR Regional Director attained finality. From the time the May 10,
2001 order of the DOLE-NCR Regional Director became final and executory, petitioners Agapay and
Alonso, Jr. were entitled to 12% legal interest per annum until the full satisfaction of their respective
claims.

WHEREFORE, the petition is hereby GRANTED. The November 25, 2004 amended decision of the
Court of Appeals in CA-G.R. SP No. 72713 is REVERSED and SET ASIDE. The July 9, 2002 order of
the Secretary of Labor and Employment affirming the May 10, 2001 order of the DOLE-NCR Regional
Director is hereby REINSTATED with the modification that the monetary award shall earn 6% legal
interest per annum from October 30, 2000 until the finality of the May 10, 2001 order of the DOLE-NCR
Regional Director and, thereafter, 12% legal interest per annum until the full satisfaction thereof.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 101279 August 6, 1992

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,

vs.
HON. RUBEN D. TORRES, as Secretary of the Department of Labor & Employment, and JOSE
N. SARMIENTO, as Administrator of the PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION, respondents.

De Guzman, Meneses & Associates for petitioner.

GRIO-AQUINO, J.:

This petition for prohibition with temporary restraining order was filed by the Philippine Association of
Service Exporters (PASEI, for short), to prohibit and enjoin the Secretary of the Department of Labor and
Employment (DOLE) and the Administrator of the Philippine Overseas Employment Administration (or
POEA) from enforcing and implementing DOLE Department Order No. 16, Series of 1991 and POEA
Memorandum Circulars Nos. 30 and 37, Series of 1991, temporarily suspending the recruitment by
private employment agencies of Filipino domestic helpers for Hong Kong and vesting in the DOLE,
through the facilities of the POEA, the task of processing and deploying such workers.

PASEI is the largest national organization of private employment and recruitment agencies duly licensed
and authorized by the POEA, to engaged in the business of obtaining overseas employment for Filipino
landbased workers, including domestic helpers.

On June 1, 1991, as a result of published stories regarding the abuses suffered by Filipino housemaids
employed in Hong Kong, DOLE Secretary Ruben D. Torres issued Department Order No. 16, Series of
1991, temporarily suspending the recruitment by private employment agencies of "Filipino domestic
helpers going to Hong Kong" (p. 30, Rollo). The DOLE itself, through the POEA took over the business
of deploying such Hong Kong-bound workers.

In view of the need to establish mechanisms that will enhance the protection for Filipino
domestic helpers going to Hong Kong, the recruitment of the same by private
employment agencies is hereby temporarily suspended effective 1 July 1991. As such,
the DOLE through the facilities of the Philippine Overseas Employment Administration
shall take over the processing and deployment of household workers bound for Hong
Kong, subject to guidelines to be issued for said purpose.

In support of this policy, all DOLE Regional Directors and the Bureau of Local
Employment's regional offices are likewise directed to coordinate with the POEA in
 maintaining a manpower pool of prospective domestic helpers to Hong Kong on a
regional basis.

For compliance. (Emphasis ours; p. 30, Rollo.)

Pursuant to the above DOLE circular, the POEA issued Memorandum Circular No. 30, Series of 1991,
dated July 10, 1991, providing GUIDELINES on the Government processing and deployment of Filipino
domestic helpers to Hong Kong and the accreditation of Hong Kong recruitment agencies intending to
hire Filipino domestic helpers.

Subject: Guidelines on the Temporary Government Processing and Deployment of

Domestic Helpers to Hong Kong.

Pursuant to Department Order No. 16, series of 1991 and in order to operationalize the
temporary government processing and deployment of domestic helpers (DHs) to Hong
Kong resulting from the temporary suspension of recruitment by private employment
agencies for said skill and host market, the following guidelines and mechanisms shall
govern the implementation of said policy.

I. Creation of a joint POEA-OWWA Household Workers Placement Unit (HWPU)

An ad hoc, one stop Household Workers Placement Unit [or HWPU] under the
supervision of the POEA shall take charge of the various operations involved in the Hong
Kong-DH industry segment:

The HWPU shall have the following functions in coordination with appropriate units and
other entities concerned:

1. Negotiations with and Accreditation of Hong Kong Recruitment Agencies

2. Manpower Pooling

3. Worker Training and Briefing

4. Processing and Deployment

5. Welfare Programs

II. Documentary Requirements and Other Conditions for Accreditation of Hong Kong
Recruitment Agencies or Principals

Recruitment agencies in Hong Kong intending to hire Filipino DHs for their employers
may negotiate with the HWPU in Manila directly or through the Philippine Labor
Attache's Office in Hong Kong.

xxx xxx xxx

X. Interim Arrangement
 All contracts stamped in Hong Kong as of June 30 shall continue to be processed by
POEA until 31 July 1991 under the name of the Philippine agencies concerned.
Thereafter, all contracts shall be processed with the HWPU.

Recruitment agencies in Hong Kong shall submit to the Philippine Consulate General in
Hong kong a list of their accepted applicants in their pool within the last week of July.
The last day of acceptance shall be July 31 which shall then be the basis of HWPU in
accepting contracts for processing. After the exhaustion of their respective pools the only
source of applicants will be the POEA manpower pool.

For strict compliance of all concerned. (pp. 31-35, Rollo.)

On August 1, 1991, the POEA Administrator also issued Memorandum Circular No. 37, Series of 1991,
on the processing of employment contracts of domestic workers for Hong Kong.

TO: All Philippine and Hong Kong Agencies engaged in the recruitment of Domestic
helpers for Hong Kong

Further to Memorandum Circular No. 30, series of 1991 pertaining to the government
processing and deployment of domestic helpers (DHs) to Hong Kong, processing of
employment contracts which have been attested by the Hong Kong Commissioner of
Labor up to 30 June 1991 shall be processed by the POEA Employment Contracts
Processing Branch up to 15 August 1991 only.

Effective 16 August 1991, all Hong Kong recruitment agent/s hiring DHs from the
Philippines shall recruit under the new scheme which requires prior accreditation which
the POEA.

Recruitment agencies in Hong Kong may apply for accreditation at the Office of the
Labor Attache, Philippine Consulate General where a POEA team is posted until 31
August 1991. Thereafter, those who failed to have themselves accredited in Hong Kong
may proceed to the POEA-OWWA Household Workers Placement Unit in Manila for
accreditation before their recruitment and processing of DHs shall be allowed.

Recruitment agencies in Hong Kong who have some accepted applicants in their pool
after the cut-off period shall submit this list of workers upon accreditation. Only those
DHs in said list will be allowed processing outside of the HWPU manpower pool.

For strict compliance of all concerned. (Emphasis supplied, p. 36, Rollo.)

On September 2, 1991, the petitioner, PASEI, filed this petition for prohibition to annul the
aforementioned DOLE and POEA circulars and to prohibit their implementation for the following
reasons:

1. that the respondents acted with grave abuse of discretion and/or in excess of their rule-
making authority in issuing said circulars;

2. that the assailed DOLE and POEA circulars are contrary to the Constitution, are
unreasonable, unfair and oppressive; and
 3. that the requirements of publication and filing with the Office of the National
Administrative Register were not complied with.

There is no merit in the first and second grounds of the petition.

Article 36 of the Labor Code grants the Labor Secretary the power to restrict and regulate recruitment and
placement activities.

Art. 36. Regulatory Power. The Secretary of Labor shall have the power to
restrict and regulate the recruitment and placement activities of all agencies within the
coverage of this title [Regulation of Recruitment and Placement Activities] and is hereby
authorized to issue orders and promulgate rules and regulations to carry out the
objectives and implement the provisions of this title. (Emphasis ours.)

On the other hand, the scope of the regulatory authority of the POEA, which was created by Executive
Order No. 797 on May 1, 1982 to take over the functions of the Overseas Employment Development
Board, the National Seamen Board, and the overseas employment functions of the Bureau of Employment
Services, is broad and far-ranging for:

1. Among the functions inherited by the POEA from the defunct Bureau of Employment
Services was the power and duty:

"2. To establish and maintain a registration and/or licensing system to

regulate private sector participation in the recruitment and placement of
workers, locally and overseas, . . ." (Art. 15, Labor Code, Emphasis
supplied). (p. 13, Rollo.)

2. It assumed from the defunct Overseas Employment Development Board the power and
duty:

3. To recruit and place workers for overseas employment of Filipino

contract workers on a government to government arrangement and in
such other sectors as policy may dictate . . . (Art. 17, Labor Code.) (p.
13, Rollo.)

3. From the National Seamen Board, the POEA took over:

2. To regulate and supervise the activities of agents or representatives of

shipping companies in the hiring of seamen for overseas employment;
and secure the best possible terms of employment for contract seamen
workers and secure compliance therewith. (Art. 20, Labor Code.)

The vesture of quasi-legislative and quasi-judicial powers in administrative bodies is not unconstitutional,
unreasonable and oppressive. It has been necessitated by "the growing complexity of the modern society"
(Solid Homes, Inc. vs. Payawal, 177 SCRA 72, 79). More and more administrative bodies are necessary
to help in the regulation of society's ramified activities. "Specialized in the particular field assigned to
them, they can deal with the problems thereof with more expertise and dispatch than can be expected
from the legislature or the courts of justice" (Ibid.).
It is noteworthy that the assailed circulars do not prohibit the petitioner from engaging in the recruitment
and deployment of Filipino landbased workers for overseas employment. A careful reading of the
challenged administrative issuances discloses that the same fall within the "administrative and policing
powers expressly or by necessary implication conferred" upon the respondents (People vs. Maceren, 79
SCRA 450). The power to "restrict and regulate conferred by Article 36 of the Labor Code involves a
grant of police power (City of Naga vs. Court of Appeals, 24 SCRA 898). To "restrict" means "to confine,
limit or stop" (p. 62, Rollo) and whereas the power to "regulate" means "the power to protect, foster,
promote, preserve, and control with due regard for the interests, first and foremost, of the public, then of
the utility and of its patrons" (Philippine Communications Satellite Corporation vs. Alcuaz, 180 SCRA
218).

The Solicitor General, in his Comment, aptly observed:

. . . Said Administrative Order [i.e., DOLE Administrative Order No. 16] merely
restricted the scope or area of petitioner's business operations by excluding therefrom
recruitment and deployment of domestic helpers for Hong Kong till after the
establishment of the "mechanisms" that will enhance the protection of Filipino domestic
helpers going to Hong Kong. In fine, other than the recruitment and deployment of
Filipino domestic helpers for Hongkong, petitioner may still deploy other class of
Filipino workers either for Hongkong and other countries and all other classes of Filipino
workers for other countries.

Said administrative issuances, intended to curtail, if not to end, rampant violations of the
rule against excessive collections of placement and documentation fees, travel fees and
other charges committed by private employment agencies recruiting and deploying
domestic helpers to Hongkong. [They are reasonable, valid and justified under the
general welfare clause of the Constitution, since the recruitment and deployment
business, as it is conducted today, is affected with public interest.

xxx xxx xxx

The alleged takeover [of the business of recruiting and placing Filipino domestic helpers
in Hongkong] is merely a remedial measure, and expires after its purpose shall have been
attained. This is evident from the tenor of Administrative Order No. 16 that recruitment
of Filipino domestic helpers going to Hongkong by private employment agencies are
hereby "temporarily suspended effective July 1, 1991."

The alleged takeover is limited in scope, being confined to recruitment of domestic

helpers going to Hongkong only.

xxx xxx xxx

. . . the justification for the takeover of the processing and deploying of domestic helpers
for Hongkong resulting from the restriction of the scope of petitioner's business is
confined solely to the unscrupulous practice of private employment agencies victimizing
applicants for employment as domestic helpers for Hongkong and not the whole
recruitment business in the Philippines. (pp. 62-65, Rollo.)

The questioned circulars are therefore a valid exercise of the police power as delegated to the executive
branch of Government.
Nevertheless, they are legally invalid, defective and unenforceable for lack of power publication and
filing in the Office of the National Administrative Register as required in Article 2 of the Civil Code,
Article 5 of the Labor Code and Sections 3(1) and 4, Chapter 2, Book VII of the Administrative Code of
1987 which provide:

Art. 2. Laws shall take effect after fifteen (15) days following the completion of their
publication in the Official Gazatte, unless it is otherwise provided. . . . (Civil Code.)

Art. 5. Rules and Regulations. The Department of Labor and other government
agencies charged with the administration and enforcement of this Code or any of its parts
shall promulgate the necessary implementing rules and regulations. Such rules and
regulations shall become effective fifteen (15) days after announcement of their
adoption in newspapers of general circulation. (Emphasis supplied, Labor Code, as
amended.)

Sec. 3. Filing. (1) Every agency shall file with the University of the Philippines Law
Center, three (3) certified copies of every rule adopted by it. Rules in force on the date of
effectivity of this Code which are not filed within three (3) months shall not thereafter be
the basis of any sanction against any party or persons. (Emphasis supplied, Chapter 2,
Book VII of the Administrative Code of 1987.)

Sec. 4. Effectivity. In addition to other rule-making requirements provided by law not

inconsistent with this Book, each rule shall become effective fifteen (15) days from the
date of filing as above provided unless a different date is fixed by law, or specified in the
rule in cases of imminent danger to public health, safety and welfare, the existence of
which must be expressed in a statement accompanying the rule. The agency shall take
appropriate measures to make emergency rules known to persons who may be affected by
them. (Emphasis supplied, Chapter 2, Book VII of the Administrative Code of 1987).

Once, more we advert to our ruling in Taada vs. Tuvera, 146 SCRA 446 that:

. . . Administrative rules and regulations must also be published if their purpose is to

enforce or implement existing law pursuant also to a valid delegation. (p. 447.)

Interpretative regulations and those merely internal in nature, that is, regulating only the
personnel of the administrative agency and not the public, need not be published. Neither
is publication required of the so-called letters of instructions issued by administrative
superiors concerning the rules or guidelines to be followed by their subordinates in the
performance of their duties. (p. 448.)

We agree that publication must be in full or it is no publication at all since its purpose is
to inform the public of the content of the laws. (p. 448.)

For lack of proper publication, the administrative circulars in question may not be enforced and
implemented.

WHEREFORE, the writ of prohibition is GRANTED. The implementation of DOLE Department Order
No. 16, Series of 1991, and POEA Memorandum Circulars Nos. 30 and 37, Series of 1991, by the public
respondents is hereby SUSPENDED pending compliance with the statutory requirements of publication
and filing under the aforementioned laws of the land.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

1 G.R. No. 78909 June 30, 1989

MATERNITY CHILDREN'S HOSPITAL, represented by ANTERA L. DORADO,

President, petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR AND THE REGIONAL DlRECTOR OF LABOR,
REGION X, respondents.

MEDIALDEA, J.:

This is a petition for certiorari seeking the annulment of the Decision of the respondent Secretary of
Labor dated September 24, 1986, affirming with modification the Order of respondent Regional Director
of Labor, Region X, dated August 4, 1986, awarding salary differentials and emergency cost of living
allowances (ECOLAS) to employees of petitioner, and the Order denying petitioner's motion for
reconsideration dated May 13, 1987, on the ground of grave abuse of discretion.

Petitioner is a semi-government hospital, managed by the Board of Directors of the Cagayan de Oro
Women's Club and Puericulture Center, headed by Mrs. Antera Dorado, as holdover President. The
hospital derives its finances from the club itself as well as from paying patients, averaging 130 per month.
It is also partly subsidized by the Philippine Charity Sweepstakes Office and the Cagayan De Oro City
government.

Petitioner has forty-one (41) employees. Aside from salary and living allowances, the employees are
given food, but the amount spent therefor is deducted from their respective salaries (pp. 77-78, Rollo).

On May 23, 1986, ten (10) employees of the petitioner employed in different capacities/positions filed a
complaint with the Office of the Regional Director of Labor and Employment, Region X, for
underpayment of their salaries and ECOLAS, which was docketed as ROX Case No. CW-71-86.

On June 16, 1986, the Regional Director directed two of his Labor Standard and Welfare Officers to
inspect the records of the petitioner to ascertain the truth of the allegations in the complaints (p.
98, Rollo). Payrolls covering the periods of May, 1974, January, 1985, November, 1985 and May, 1986,
were duly submitted for inspection.

On July 17, 1986, the Labor Standard and Welfare Officers submitted their report confirming that there
was underpayment of wages and ECOLAs of all the employees by the petitioner, the dispositive portion
of which reads:
 IN VIEW OF THE FOREGOING, deficiency on wage and ecola as verified and
confirmed per review of the respondent payrolls and interviews with the complainant
workers and all other information gathered by the team, it is respectfully recommended to
the Honorable Regional Director, this office, that Antera Dorado, President be
ORDERED to pay the amount of SIX HUNDRED FIFTY FOUR THOUSAND SEVEN
HUNDRED FIFTY SIX & 01/100 (P654,756.01), representing underpayment of wages
and ecola to the THIRTY SIX (36) employees of the said hospital as appearing in the
attached Annex "F" worksheets and/or whatever action equitable under the premises. (p.
99, Rollo)

Based on this inspection report and recommendation, the Regional Director issued an Order dated August
4, 1986, directing the payment of P723,888.58, representing underpayment of wages and ECOLAs to all
the petitioner's employees, the dispositive portion of which reads:

WHEREFORE, premises considered, respondent Maternity and Children Hospital is

hereby ordered to pay the above-listed complainants the total amount indicated opposite
each name, thru this Office within ten (10) days from receipt thereof. Thenceforth, the
respondent hospital is also ordered to pay its employees/workers the prevailing statutory
minimum wage and allowance.

SO ORDERED. (p. 34, Rollo)

Petitioner appealed from this Order to the Minister of Labor and Employment, Hon. Augusto S. Sanchez,
who rendered a Decision on September 24, 1986, modifying the said Order in that deficiency wages and
ECOLAs should be computed only from May 23, 1983 to May 23, 1986, the dispositive portion of which
reads:

WHEREFORE, the August 29, 1986 order is hereby MODIFIED in that the deficiency
wages and ECOLAs should only be computed from May 23, 1983 to May 23, 1986. The
case is remanded to the Regional Director, Region X, for recomputation specifying the
amounts due each the complainants under each of the applicable Presidential Decrees. (p.
40, Rollo)

On October 24, 1986, the petitioner filed a motion for reconsideration which was denied by the Secretary
of Labor in his Order dated May 13, 1987, for lack of merit (p. 43 Rollo).

The instant petition questions the all-embracing applicability of the award involving salary differentials
and ECOLAS, in that it covers not only the hospital employees who signed the complaints, but also those
(a) who are not signatories to the complaint, and (b) those who were no longer in the service of the
hospital at the time the complaints were filed.

Petitioner likewise maintains that the Order of the respondent Regional Director of Labor, as affirmed
with modifications by respondent Secretary of Labor, does not clearly and distinctly state the facts and the
law on which the award was based. In its "Rejoinder to Comment", petitioner further questions the
authority of the Regional Director to award salary differentials and ECOLAs to private respondents,
(relying on the case of Encarnacion vs. Baltazar, G.R. No. L-16883, March 27, 1961, 1 SCRA 860, as
authority for raising the additional issue of lack of jurisdiction at any stage of the proceedings, p.
52, Rollo), alleging that the original and exclusive jurisdiction over money claims is properly lodged in
the Labor Arbiter, based on Article 217, paragraph 3 of the Labor Code.
The primary issue here is whether or not the Regional Director had jurisdiction over the case and if so, the
extent of coverage of any award that should be forthcoming, arising from his visitorial and enforcement
powers under Article 128 of the Labor Code. The matter of whether or not the decision states clearly and
distinctly statement of facts as well as the law upon which it is based, becomes relevant after the issue on
jurisdiction has been resolved.

This is a labor standards case, and is governed by Art. 128-b of the Labor Code, as amended by E.O. No.
111. Labor standards refer to the minimum requirements prescribed by existing laws, rules, and
regulations relating to wages, hours of work, cost of living allowance and other monetary and welfare
benefits, including occupational, safety, and health standards (Section 7, Rule I, Rules on the Disposition
of Labor Standards Cases in the Regional Office, dated September 16, 1987). 1 Under the present rules, a
Regional Director exercises both visitorial and enforcement power over labor standards cases, and is
therefore empowered to adjudicate money claims, provided there still exists an employer-employee
relationship, and the findings of the regional office is not contested by the employer concerned.

Prior to the promulgation of E.O. No. 111 on December 24, 1986, the Regional Director's authority over
money claims was unclear. The complaint in the present case was filed on May 23, 1986 when E.O. No.
111 was not yet in effect, and the prevailing view was that stated in the case of Antonio Ong, Sr. vs.
Henry M. Parel, et al., G.R. No. 76710, dated December 21, 1987, thus:

. . . the Regional Director, in the exercise of his visitorial and enforcement powers under
Article 128 of the Labor Code, has no authority to award money claims, properly falling
within the jurisdiction of the labor arbiter. . . .

. . . If the inspection results in a finding that the employer has violated certain labor
standard laws, then the regional director must order the necessary rectifications.
However, this does not include adjudication of money claims, clearly within the ambit of
the labor arbiter's authority under Article 217 of the Code.

The Ong case relied on the ruling laid down in Zambales Base Metals Inc. vs. The Minister of Labor, et
al., (G.R. Nos. 73184-88, November 26, 1986, 146 SCRA 50) that the "Regional Director was not
empowered to share in the original and exclusive jurisdiction conferred on Labor Arbiters by Article
217."

We believe, however, that even in the absence of E. O. No. 111, Regional Directors already had
enforcement powers over money claims, effective under P.D. No. 850, issued on December 16, 1975,
which transferred labor standards cases from the arbitration system to the enforcement system.

To clarify matters, it is necessary to enumerate a series of rules and provisions of law on the disposition of
labor standards cases.

Prior to the promulgation of PD 850, labor standards cases were an exclusive function of labor arbiters,
under Article 216 of the then Labor Code (PD No. 442, as amended by PD 570-a), which read in part:

Art. 216. Jurisdiction of the Commission. The Commission shall have exclusive
appellate jurisdiction over all cases decided by the Labor Arbiters and compulsory
arbitrators.

The Labor Arbiters shall have exclusive jurisdiction to hear and decide the following
cases involving all workers whether agricultural or non-agricultural.
 xxx xxx xxx

(c) All money claims of workers, involving non-payment or

underpayment of wages, overtime compensation, separation pay,
maternity leave and other money claims arising from employee-employer
relations, except claims for workmen's compensation, social security and
medicare benefits;

(d) Violations of labor standard laws;

xxx xxx xxx

(Emphasis supplied)

The Regional Director exercised visitorial rights only under then Article 127 of the Code as follows:

ART. 127. Visitorial Powers. The Secretary of Labor or his duly authorized
representatives, including, but not restricted, to the labor inspectorate, shall have access
to employers' records and premises at any time of the day or night whenever work is
being undertaken therein, and the right to copy therefrom, to question any employee and
investigate any fact, condition or matter which may be necessary to determine violations
or in aid in the enforcement of this Title and of any Wage Order or regulation issued
pursuant to this Code.

With the promulgation of PD 850, Regional Directors were given enforcement powers, in addition to
visitorial powers. Article 127, as amended, provided in part:

SEC. 10. Article 127 of the Code is hereby amended to read as follows:

Art. 127. Visitorial and enforcement powers.

xxx xxx xxx

(b) The Secretary of Labor or his duly authorized

representatives shall have the power to order and
administer, after due notice and hearing, compliance
with the labor standards provisions of this Code based
on the findings of labor regulation officers or industrial
safety engineers made in the course of inspection, and to
issue writs of execution to the appropriate authority for
the enforcement of their order.

xxx xxx xxx

Labor Arbiters, on the other hand, lost jurisdiction over labor standards cases. Article 216, as then
amended by PD 850, provided in part:

SEC. 22. Article 216 of the Code is hereby amended to read as follows:
 Art. 216. Jurisdiction of Labor Arbiters and the Commission. (a) The
Labor Arbiters shall have exclusive jurisdiction to hear and decide the
following cases involving all workers, whether agricultural or non-
agricultural:

xxx xxx xxx

(3) All money claims of workers involving non-payment

or underpayment of wages, overtime or premium
compensation, maternity or service incentive leave,
separation pay and other money claims arising from
employer-employee relations, except claims for
employee's compensation, social security and medicare
benefits and as otherwise provided in Article 127 of this
Code.

xxx xxx xxx

(Emphasis supplied)

Under the then Labor Code therefore (PD 442 as amended by PD 570-a, as further amended by PD 850),
there were three adjudicatory units: The Regional Director, the Bureau of Labor Relations and the Labor
Arbiter. It became necessary to clarify and consolidate all governing provisions on jurisdiction into one
document. 2 On April 23, 1976, MOLE Policy Instructions No. 6 was issued, and provides in part (on
labor standards cases) as follows:

POLICY INSTRUCTIONS NO. 6

TO: All Concerned

SUBJECT: DISTRIBUTION OF JURISDICTION OVER LABOR CASES

xxx xxx xxx

1. The following cases are under the exclusive original jurisdiction of the
Regional Director.

a) Labor standards cases arising from violations of labor

standard laws discovered in the course of inspection or
complaints where employer-employee relations still
exist;

xxx xxx xxx

2. The following cases are under the exclusive original jurisdiction of

the Conciliation Section of the Regional Office:

a) Labor standards cases where employer-employee

relations no longer exist;
 xxx xxx xxx

6. The following cases are certifiable to the Labor Arbiters:

a) Cases not settled by the Conciliation Section of the

Regional Office, namely:

1) labor standard cases where employer-employee

relations no longer exist;

xxx xxx xxx

(Emphasis supplied)

MOLE Policy Instructions No. 7 (undated) was likewise subsequently issued, enunciating the rationale
for, and the scope of, the enforcement power of the Regional Director, the first and second paragraphs of
which provide as follows:

POLICY INSTRUCTIONS NO. 7

TO: All Regional Directors

SUBJECT: LABOR STANDARDS CASES

Under PD 850, labor standards cases have been taken from the arbitration system
and placed under the enforcement system, except where a) questions of law are involved
as determined by the Regional Director, b) the amount involved exceeds P100,000.00 or
over 40% of the equity of the employer, whichever is lower, c) the case requires
evidentiary matters not disclosed or verified in the normal course of inspection, or
d) there is no more employer-employee relationship.

The purpose is clear: to assure the worker the rights and benefits due to him under labor
standards laws without having to go through arbitration. The worker need not litigate to
get what legally belongs to him. The whole enforcement machinery of the Department of
Labor exists to insure its expeditious delivery to him free of charge. (Emphasis supplied)

Under the foregoing, a complaining employee who was denied his rights and benefits due him under labor
standards law need not litigate. The Regional Director, by virtue of his enforcement power, assured
"expeditious delivery to him of his rights and benefits free of charge", provided of course, he was still in
the employ of the firm.

After PD 850, Article 216 underwent a series of amendments (aside from being re-numbered as Article
217) and with it a corresponding change in the jurisdiction of, and supervision over, the Labor Arbiters:

1. PD 1367 (5-1-78) gave Labor Arbiters exclusive jurisdiction

over unresolved issues in collective bargaining, etc., and those cases
arising from employer-employee relations duly indorsed by the Regional
Directors. (It also removed his jurisdiction over moral or other damages)
 In other words, the Labor Arbiter entertained cases certified to him.
(Article 228, 1978 Labor Code.)

2. PD 1391 (5-29-78) all regional units of the National Labor

Relations Commission (NLRC) were integrated into the Regional Offices
Proper of the Ministry of Labor; effectively transferring direct
administrative control and supervision over the Arbitration Branch to the
Director of the Regional Office of the Ministry of Labor. "Conciliable
cases" which were thus previously under the jurisdiction of the defunct
Conciliation Section of the Regional Office for purposes of conciliation
or amicable settlement, became immediately assignable to the
Arbitration Branch for joint conciliation and compulsory arbitration. In
addition, the Labor Arbiter had jurisdiction even over termination and
labor-standards cases that may be assigned to them for compulsory
arbitration by the Director of the Regional Office. PD 1391 merged
conciliation and compulsory arbitration functions in the person of the
Labor Arbiter. The procedure governing the disposition of cases at the
Arbitration Branch paralleled those in the Special Task Force and Field
Services Division, with one major exception: the Labor Arbiter exercised
full and untrammelled authority in the disposition of the case,
particularly in the substantive aspect, his decisions and orders subject to
review only on appeal to the NLRC. 3

3. MOLE Policy Instructions No. 37 Because of the seemingly

overlapping functions as a result of PD 1391, MOLE Policy Instructions
No. 37 was issued on October 7, 1978, and provided in part:

POLICY INSTRUCTIONS NO. 37

TO: All Concerned

SUBJECT: ASSIGNMENT OF CASES TO LABOR ARBITERS

Pursuant to the provisions of Presidential Decree No. 1391 and to insure

speedy disposition of labor cases, the following guidelines are hereby
established for the information and guidance of all concerned.

1. Conciliable Cases.

Cases which are conciliable per se i.e., (a) labor standards cases where
employer-employee relationship no longer exists; (b) cases involving
deadlock in collective bargaining, except those falling under P.D. 823, as
amended; (c) unfair labor practice cases; and (d) overseas employment
cases, except those involving overseas seamen, shall be assigned by the
Regional Director to the Labor Arbiter for conciliation and arbitration
without coursing them through the conciliation section of the Regional
Office.

2. Labor Standards Cases.

 Cases involving violation of labor standards laws where employer-
employee relationship still exists shall be assigned to the Labor Arbiters
where:

a) intricate questions of law are involved; or

b) evidentiary matters not disclosed or verified in the

normal course of inspection by labor regulations officers
are required for their proper disposition.

3. Disposition of Cases.

When a case is assigned to a Labor Arbiter, all issues raised therein shall
be resolved by him including those which are originally cognizable by
the Regional Director to avoid multiplicity of proceedings. In other
words, the whole case, and not merely issues involved therein, shall be
assigned to and resolved by him.

xxx xxx xxx

(Emphasis supplied)

4. PD 1691(5-1-80) original and exclusive jurisdiction

over unresolved issues in collective bargaining and money claims,
which includes moral or other damages.

Despite the original and exclusive jurisdiction of labor arbiters over money claims,
however, the Regional Director nonetheless retained his enforcement power, and
remained empowered to adjudicate uncontested money claims.

5. BP 130 (8-21-8l) strengthened voluntary arbitration. The decree

also returned the Labor Arbiters as part of the NLRC, operating as
Arbitration Branch thereof.

6. BP 227(6-1- 82) original and exclusive jurisdiction over questions

involving legality of strikes and lock-outs.

The present petition questions the authority of the Regional Director to issue the Order, dated August 4,
1986, on the basis of his visitorial and enforcement powers under Article 128 (formerly Article 127) of
the present Labor Code. It is contended that based on the rulings in the Ong vs. Parel (supra) and
the Zambales Base Metals, Inc. vs. TheMinister of Labor (supra) cases, a Regional Director is precluded
from adjudicating money claims on the ground that this is an exclusive function of the Labor Arbiter
under Article 217 of the present Code.

On August 4, 1986, when the order was issued, Article 128(b) 4 read as follows:

(b) The Minister of Labor or his duly authorized representatives shall

have the power to order and administer, after due notice and hearing,
compliance with the labor standards provisions of this Code based on the
 findings of labor regulation officers or industrial safety engineers made
in the course of inspection, and to issue writs of execution to the
appropriate authority for the enforcement of their order, except in cases
where the employer contests the findings of the labor regulations officer
and raises issues which cannot be resolved without considering
evidentiary matters that are not verifiable in the normal course of
inspection. (Emphasis supplied)

On the other hand, Article 217 of the Labor Code as amended by P.D. 1691, effective May 1, 1980; Batas
Pambansa Blg. 130, effective August 21, 1981; and Batas Pambansa Blg. 227, effective June 1,
1982, inter alia, provides:

ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters
shall have the original and exclusive jurisdiction to hear and decide within thirty (30)
working days after submission of the case by the parties for decision, the following cases
involving all workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Those that workers may file involving wages, hours of work and other
terms and conditions of employment;

3. All money claims of workers, including those based on non-payment

or underpayment of wages, overtime compensation, separation pay and
other benefits provided by law or appropriate agreement, except claims
for employees' compensation, social security, medicare and maternity
benefits;

4. Cases involving household services; and

5. Cases arising from any violation of Article 265 of this Code, including
questions involving the legality of strikes and lock-outs. (Emphasis
supplied)

The Ong and Zambales cases involved workers who were still connected with the company. However, in
the Ong case, the employer disputed the adequacy of the evidentiary foundation (employees' affidavits) of
the findings of the labor standards inspectors while in the Zambales case, the money claims which arose
from alleged violations of labor standards provisions were not discovered in the course of normal
inspection. Thus, the provisions of MOLE Policy Instructions Nos. 6, (Distribution of Jurisdiction Over
Labor Cases) and 37 (Assignment of Cases to Labor Arbiters) giving Regional Directors adjudicatory
powers over uncontested money claims discovered in the course of normal inspection, provided an
employer-employee relationship still exists, are inapplicable.

In the present case, petitioner admitted the charge of underpayment of wages to workers still in its
employ; in fact, it pleaded for time to raise funds to satisfy its obligation. There was thus no contest
against the findings of the labor inspectors.

Barely less than a month after the promulgation on November 26, 1986 of the Zambales Base Metals
case, Executive Order No. 111 was issued on December 24, 1986, 5 amending Article 128(b) of the Labor
Code, to read as follows:
 (b) THE PROVISIONS OF ARTICLE 217 OF THIS CODE TO THE
CONTRARY NOTWITHSTANDING AND IN CASES WHERE THE
RELATIONSHIP OF EMPLOYER-EMPLOYEE STILL EXISTS, the
Minister of Labor and Employment or his duly authorized
representatives shall have the power to order and administer, after due
notice and hearing, compliance with the labor standards provisions of
this Code AND OTHER LABOR LEGISLATION based on the findings
of labor regulation officers or industrial safety engineers made in the
course of inspection, and to issue writs of execution to the appropriate
authority for the enforcement of their orders, except in cases where the
employer contests the findings of the labor regulation officer and raises
issues which cannot be resolved without considering evidentiary matters
that are not verifiable in the normal course of inspection. (Emphasis
supplied)

As seen from the foregoing, EO 111 authorizes a Regional Director to order compliance by an employer
with labor standards provisions of the Labor Code and other legislation. It is Our considered opinion
however, that the inclusion of the phrase, " The provisions of Article 217 of this Code to the contrary
notwithstanding and in cases where the relationship of employer-employee still exists" ... in Article
128(b), as amended, above-cited, merely confirms/reiterates the enforcement adjudication authority of the
Regional Director over uncontested money claims in cases where an employer-employee relationship still
exists. 6

Viewed in the light of PD 850 and read in coordination with MOLE Policy Instructions Nos. 6, 7 and 37,
it is clear that it has always been the intention of our labor authorities to provide our workers immediate
access (when still feasible, as where an employer-employee relationship still exists) to their rights and
benefits, without being inconvenienced by arbitration/litigation processes that prove to be not only nerve-
wracking, but financially burdensome in the long run.

Note further the second paragraph of Policy Instructions No. 7 indicating that the transfer of labor
standards cases from the arbitration system to the enforcement system is

. . to assure the workers the rights and benefits due to him under labor standard laws,
without having to go through arbitration. . .

so that

. . the workers would not litigate to get what legally belongs to him. .. ensuring delivery .
. free of charge.

Social justice legislation, to be truly meaningful and rewarding to our workers, must not be hampered in
its application by long-winded arbitration and litigation. Rights must be asserted and benefits received
with the least inconvenience. Labor laws are meant to promote, not defeat, social justice.

This view is in consonance with the present "Rules on the Disposition of Labor Standard Cases in the
Regional Offices " 7 issued by the Secretary of Labor, Franklin M. Drilon on September 16, 1987.

Thus, Sections 2 and 3 of Rule II on "Money Claims Arising from Complaint Routine Inspection",
provide as follows:
 Section 2. Complaint inspection. All such complaints shall immediately be forwarded
to the Regional Director who shall refer the case to the appropriate unit in the Regional
Office for assignment to a Labor Standards and Welfare Officer (LSWO) for field
inspection. When the field inspection does not produce the desired results, the Regional
Director shall summon the parties for summary investigation to expedite the disposition
of the case. . . .

Section 3. Complaints where no employer-employee relationship actually exists.

Where employer-employee relationship no longer exists by reason of the fact that it has
already been severed, claims for payment of monetary benefits fall within the exclusive
and original jurisdiction of the labor arbiters. . . . (Emphasis supplied)

Likewise, it is also clear that the limitation embodied in MOLE Policy Instructions No. 7 to amounts not
exceeding P100,000.00 has been dispensed with, in view of the following provisions of pars. (b) and (c),
Section 7 on "Restitution", the same Rules, thus:

xxx xxx xxx

(b) Plant-level restitutions may be effected for money claims not

exceeding Fifty Thousand (P50,000.00). . . .

(c) Restitutions in excess of the aforementioned amount shall be effected

at the Regional Office or at the worksite subject to the prior approval of
the Regional Director.

which indicate the intention to empower the Regional Director to award money claims in excess of
P100,000.00; provided of course the employer does not contest the findings made, based on the
provisions of Section 8 thereof:

Section 8. Compromise agreement. Should the parties arrive at an agreement as to the

whole or part of the dispute, said agreement shall be reduced in writing and signed by the
parties in the presence of the Regional Director or his duly authorized representative.

E.O. No. 111 was issued on December 24, 1986 or three (3) months after the promulgation of the
Secretary of Labor's decision upholding private respondents' salary differentials and ECOLAs on
September 24, 1986. The amendment of the visitorial and enforcement powers of the Regional Director
(Article 128-b) by said E.O. 111 reflects the intention enunciated in Policy Instructions Nos. 6 and 37 to
empower the Regional Directors to resolve uncontested money claims in cases where an employer-
employee relationship still exists. This intention must be given weight and entitled to great respect. As
held in Progressive Workers' Union, et. al. vs. F.P. Aguas, et. al. G.R. No. 59711-12, May 29, 1985, 150
SCRA 429:

. . The interpretation by officers of laws which are entrusted to their administration is

entitled to great respect. We see no reason to detract from this rudimentary rule in
administrative law, particularly when later events have proved said interpretation to be in
accord with the legislative intent. ..

The proceedings before the Regional Director must, perforce, be upheld on the basis of Article 128(b) as
amended by E.O. No. 111, dated December 24, 1986, this executive order "to be considered in the nature
of a curative statute with retrospective application." (Progressive Workers' Union, et al. vs. Hon. F.P.
Aguas, et al. (Supra); M. Garcia vs. Judge A. Martinez, et al., G.R. No. L- 47629, May 28, 1979, 90
SCRA 331).

We now come to the question of whether or not the Regional Director erred in extending the award to all
hospital employees. We answer in the affirmative.

The Regional Director correctly applied the award with respect to those employees who signed the
complaint, as well as those who did not sign the complaint, but were still connected with the hospital at
the time the complaint was filed (See Order, p. 33 dated August 4, 1986 of the Regional Director, Pedrito
de Susi, p. 33, Rollo).

The justification for the award to this group of employees who were not signatories to the complaint is
that the visitorial and enforcement powers given to the Secretary of Labor is relevant to, and exercisable
over establishments, not over the individual members/employees, because what is sought to be achieved
by its exercise is the observance of, and/or compliance by, such firm/establishment with the labor
standards regulations. Necessarily, in case of an award resulting from a violation of labor legislation by
such establishment, the entire members/employees should benefit therefrom. As aptly stated by then
Minister of Labor Augusto S. Sanchez:

. . It would be highly derogatory to the rights of the workers, if after categorically finding
the respondent hospital guilty of underpayment of wages and ECOLAs, we limit the
award to only those who signed the complaint to the exclusion of the majority of the
workers who are similarly situated. Indeed, this would be not only render the
enforcement power of the Minister of Labor and Employment nugatory, but would be the
pinnacle of injustice considering that it would not only discriminate but also deprive them
of legislated benefits.

. . . (pp. 38-39, Rollo).

This view is further bolstered by the provisions of Sec. 6, Rule II of the "Rules on the Disposition of
Labor Standards cases in the Regional Offices" (supra) presently enforced, viz:

SECTION 6. Coverage of complaint inspection. A complaint inspection shall not be

limited to the specific allegations or violations raised by the complainants/workers but
shall be a thorough inquiry into and verification of the compliance by employer with
existing labor standards and shall cover all workers similarly situated. (Emphasis
supplied)

However, there is no legal justification for the award in favor of those employees who were no longer
connected with the hospital at the time the complaint was filed, having resigned therefrom in 1984, viz:

1. Jean (Joan) Venzon (See Order, p. 33, Rollo)

2. Rosario Paclijan
3. Adela Peralta
4. Mauricio Nagales
5. Consesa Bautista
6. Teresita Agcopra
7. Felix Monleon
8. Teresita Salvador
9. Edgar Cataluna; and
 10. Raymond Manija ( p.7, Rollo)

The enforcement power of the Regional Director cannot legally be upheld in cases of separated
employees. Article 129 of the Labor Code, cited by petitioner (p. 54, Rollo) is not applicable as said
article is in aid of the enforcement power of the Regional Director; hence, not applicable where the
employee seeking to be paid underpayment of wages is already separated from the service. His claim is
purely a money claim that has to be the subject of arbitration proceedings and therefore within the
original and exclusive jurisdiction of the Labor Arbiter.

Petitioner has likewise questioned the order dated August 4, 1986 of the Regional Director in that it does
not clearly and distinctly state the facts and the law on which the award is based.

We invite attention to the Minister of Labor's ruling thereon, as follows:

Finally, the respondent hospital assails the order under appeal as null and void because it
does not clearly and distinctly state the facts and the law on which the awards were
based. Contrary to the pretensions of the respondent hospital, we have carefully reviewed
the order on appeal and we found that the same contains a brief statement of the (a) facts
of the case; (b) issues involved; (c) applicable laws; (d) conclusions and the reasons
therefor; (e) specific remedy granted (amount awarded). (p. 40, Rollo)

ACCORDINGLY, this petition should be dismissed, as it is hereby DISMISSED, as regards all persons
still employed in the Hospital at the time of the filing of the complaint, but GRANTED as regards those
employees no longer employed at that time.

SO ORDERED.

Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Cortes, Grio-
Aquino and Regalado, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 79255 January 20, 1992

UNION OF FILIPRO EMPLOYEES (UFE), petitioner,

vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTL
PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents.

Jose C. Espinas for petitioner.

Siguion Reyna, Montecillo & Ongsiako for private respondent.

GUTIERREZ, JR., J.:

This labor dispute stems from the exclusion of sales personnel from the holiday pay award and the change
of the divisor in the computation of benefits from 251 to 261 days.

On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National
Labor Relations Commission (NLRC) a petition for declaratory relief seeking a ruling on its rights and
obligations respecting claims of its monthly paid employees for holiday pay in the light of the Court's
decision in Chartered Bank Employees Association v. Ople (138 SCRA 273 [1985]).

Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary
arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator.

On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to:

pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject
only to the exclusions and limitations specified in Article 82 and such other legal
restrictions as are provided for in the Code. (Rollo,
p. 31)

Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2)
the exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical representatives
(hereinafter referred to as sales personnel) from the award of the holiday pay, and (3) deduction from
the holiday pay award of overpayment for overtime, night differential, vacation and sick leave benefits
due to the use of 251 divisor. (Rollo, pp. 138-145)
Petitioner UFE answered that the award should be made effective from the date of effectivity of the Labor
Code, that their sales personnel are not field personnel and are therefore entitled to holiday pay, and that
the use of 251 as divisor is an established employee benefit which cannot be diminished.

On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of the holiday
pay award shall retroact to November 1, 1974, the date of effectivity of the Labor Code. He adjudged,
however, that the company's sales personnel are field personnel and, as such, are not entitled to holiday
pay. He likewise ruled that with the grant of 10 days' holiday pay, the divisor should be changed from 251
to 261 and ordered the reimbursement of overpayment for overtime, night differential, vacation and sick
leave pay due to the use of 251 days as divisor.

Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent Arbitrator
treated the two motions as appeals and forwarded the case to the NLRC which issued a resolution dated
May 25, 1987 remanding the case to the respondent arbitrator on the ground that it has no jurisdiction to
review decisions in voluntary arbitration cases pursuant to Article 263 of the Labor Code as amended by
Section 10, Batas Pambansa Blg. 130 and as implemented by Section 5 of the rules implementing B.P.
Blg. 130.

However, in a letter dated July 6, 1987, the respondent arbitrator refused to take cognizance of the case
reasoning that he had no more jurisdiction to continue as arbitrator because he had resigned from service
effective May 1, 1986.

Hence, this petition.

The petitioner union raises the following issues:

1) Whether or not Nestle's sales personnel are entitled to holiday pay; and

2) Whether or not, concomitant with the award of holiday pay, the divisor should be changed from 251 to
261 days and whether or not the previous use of 251 as divisor resulted in overpayment for overtime,
night differential, vacation and sick leave pay.

The petitioner insists that respondent's sales personnel are not field personnel under Article 82 of the
Labor Code. The respondent company controverts this assertion.

Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as
"non-agritultural employees who regularly perform their duties away from the principal place of business
or branch office of the employer and whose actual hours of work in the field cannot be determined with
reasonable certainty."

The controversy centers on the interpretation of the clause "whose actual hours of work in the field cannot
be determined with reasonable certainty."

It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the
office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based.

The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales
personnel's working hours which can be determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours of work in the field be reasonably
ascertained. The company has no way of determining whether or not these sales personnel, even if they
report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m, really spend the hours
in between in actual field work.

We concur with the following disquisition by the respondent arbitrator:

The requirement for the salesmen and other similarly situated employees to report for
work at the office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is not within the realm of
work in the field as defined in the Code but an exercise of purely management
prerogative of providing administrative control over such personnel. This does not in any
manner provide a reasonable level of determination on the actual field work of the
employees which can be reasonably ascertained. The theoretical analysis that salesmen
and other similarly-situated workers regularly report for work at 8:00 a.m. and return to
their home station at 4:00 or 4:30 p.m., creating the assumption that their field work is
supervised, is surface projection. Actual field work begins after 8:00 a.m., when the sales
personnel follow their field itinerary, and ends immediately before 4:00 or 4:30 p.m.
when they report back to their office. The period between 8:00 a.m. and 4:00 or 4:30 p.m.
comprises their hours of work in the field, the extent or scope and result of which are
subject to their individual capacity and industry and which "cannot be determined with
reasonable certainty." This is the reason why effective supervision over field work of
salesmen and medical representatives, truck drivers and merchandisers is practically a
physical impossibility. Consequently, they are excluded from the ten holidays with pay
award. (Rollo, pp. 36-37)

Moreover, the requirement that "actual hours of work in the field cannot be determined with reasonable
certainty" must be read in conjunction with Rule IV, Book III of the Implementing Rules which provides:

Rule IV Holidays with Pay

Sec. 1. Coverage This rule shall apply to all employees except:

xxx xxx xxx

(e) Field personnel and other employees whose time and performance is unsupervised by
the employer . . . (Emphasis supplied)

While contending that such rule added another element not found in the law (Rollo, p. 13), the petitioner
nevertheless attempted to show that its affected members are not covered by the abovementioned rule.
The petitioner asserts that the company's sales personnel are strictly supervised as shown by the SOD
(Supervisor of the Day) schedule and the company circular dated March 15, 1984 (Annexes 2 and
3, Rollo, pp. 53-55).

Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not add
another element to the Labor Code definition of field personnel. The clause "whose time and performance
is unsupervised by the employer" did not amplify but merely interpreted and expounded the clause
"whose actual hours of work in the field cannot be determined with reasonable certainty." The former
clause is still within the scope and purview of Article 82 which defines field personnel. Hence, in
deciding whether or not an employee's actual working hours in the field can be determined with
reasonable certainty, query must be made as to whether or not such employee's time and performance is
constantly supervised by the employer.

The SOD schedule adverted to by the petitioner does not in the least signify that these sales personnel's
time and performance are supervised. The purpose of this schedule is merely to ensure that the sales
personnel are out of the office not later than 8:00 a.m. and are back in the office not earlier than 4:00 p.m.

Likewise, the Court fails to see how the company can monitor the number of actual hours spent in field
work by an employee through the imposition of sanctions on absenteeism contained in the company
circular of March 15, 1984.

The petitioner claims that the fact that these sales personnel are given incentive bonus every quarter based
on their performance is proof that their actual hours of work in the field can be determined with
reasonable certainty.

The Court thinks otherwise.

The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on sales
target; (2) good collection performance; (3) proper compliance with good market hygiene; (4) good
merchandising work; (5) minimal market returns; and (6) proper truck maintenance. (Rollo, p. 190).

The above criteria indicate that these sales personnel are given incentive bonuses precisely because of the
difficulty in measuring their actual hours of field work. These employees are evaluated by the result of
their work and not by the actual hours of field work which are hardly susceptible to determination.

In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]), the Court had
occasion to discuss the nature of the job of a salesman. Citing the case of Jewel Tea
Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated:

The reasons for excluding an outside salesman are fairly apparent. Such a salesman, to a
greater extent, works individually. There are no restrictions respecting the time he shall
work and he can earn as much or as little, within the range of his ability, as his ambition
dictates. In lieu of overtime he ordinarily receives commissions as extra compensation.
He works away from his employer's place of business, is not subject to the personal
supervision of his employer, and his employer has no way of knowing the number of
hours he works per day.

While in that case the issue was whether or not salesmen were entitled to overtime pay, the same rationale
for their exclusion as field personnel from holiday pay benefits also applies.

The petitioner union also assails the respondent arbitrator's ruling that, concomitant with the award of
holiday pay, the divisor should be changed from 251 to 261 days to include the additional 10 holidays and
the employees should reimburse the amounts overpaid by Filipro due to the use of 251 days' divisor.

Arbitrator Vivar's rationale for his decision is as follows:

. . . The new doctrinal policy established which ordered payment of ten holidays certainly
adds to or accelerates the basis of conversion and computation by ten days. With the
inclusion of ten holidays as paid days, the divisor is no longer 251 but 261 or 262 if
 election day is counted. This is indeed an extremely difficult legal question of
interpretation which accounts for what is claimed as falling within the concept of "solutio
indebti."

When the claim of the Union for payment of ten holidays was granted, there was a
consequent need to abandon that 251 divisor. To maintain it would create an impossible
situation where the employees would benefit with additional ten days with pay but would
simultaneously enjoy higher benefits by discarding the same ten days for purposes of
computing overtime and night time services and considering sick and vacation leave
credits. Therefore, reimbursement of such overpayment with the use of 251 as divisor
arises concomitant with the award of ten holidays with pay. (Rollo, p. 34)

The divisor assumes an important role in determining whether or not holiday pay is already included in
the monthly paid employee's salary and in the computation of his daily rate. This is the thrust of our
pronouncement in Chartered Bank Employees Association v. Ople (supra). In that case, We held:

It is argued that even without the presumption found in the rules and in the policy
instruction, the company practice indicates that the monthly salaries of the employees are
so computed as to include the holiday pay provided by law. The petitioner contends
otherwise.

One strong argument in favor of the petitioner's stand is the fact that the Chartered Bank,
in computing overtime compensation for its employees, employs a "divisor" of 251 days.
The 251 working days divisor is the result of subtracting all Saturdays, Sundays and the
ten (10) legal holidays from the total number of calendar days in a year. If the employees
are already paid for all non-working days, the divisor should be 365 and not 251.

In the petitioner's case, its computation of daily ratio since September 1, 1980, is as follows:

monthly rate x 12 months

251 days

Following the criterion laid down in the Chartered Bank case, the use of 251 days' divisor by respondent
Filipro indicates that holiday pay is not yet included in the employee's salary, otherwise the divisor should
have been 261.

It must be stressed that the daily rate, assuming there are no intervening salary increases, is a constant
figure for the purpose of computing overtime and night differential pay and commutation of sick and
vacation leave credits. Necessarily, the daily rate should also be the same basis for computing the 10
unpaid holidays.

The respondent arbitrator's order to change the divisor from 251 to 261 days would result in a lower daily
rate which is violative of the prohibition on non-diminution of benefits found in Article 100 of the Labor
Code. To maintain the same daily rate if the divisor is adjusted to 261 days, then the dividend,
which represents the employee's annual salary, should correspondingly be increased to incorporate the
holiday pay. To illustrate, if prior to the grant of holiday pay, the employee's annual salary is P25,100,
then dividing such figure by 251 days, his daily rate is P100.00 After the payment of 10 days' holiday
pay, his annual salary already includes holiday pay and totals P26,100 (P25,100 + 1,000). Dividing this
by 261 days, the daily rate is still P100.00. There is thus no merit in respondent Nestle's claim of
overpayment of overtime and night differential pay and sick and vacation leave benefits, the computation
of which are all based on the daily rate, since the daily rate is still the same before and after the grant of
holiday pay.

Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251 days as
divisor must fail in light of the Labor Code mandate that "all doubts in the implementation and
interpretation of this Code, including its implementing rules and regulations, shall be resolved in favor of
labor." (Article 4). Moreover, prior to September 1, 1980, when the company was on a 6-day working
schedule, the divisor used by the company was 303, indicating that the 10 holidays were likewise not
paid. When Filipro shifted to a 5-day working schebule on September 1, 1980, it had the chance to rectify
its error, if ever there was one but did not do so. It is now too late to allege payment by mistake.

Nestle also questions the voluntary arbitrator's ruling that holiday pay should be computed from
November 1, 1974. This ruling was not questioned by the petitioner union as obviously said decision was
favorable to it. Technically, therefore, respondent Nestle should have filed a separate petition raising the
issue of effectivity of the holiday pay award. This Court has ruled that an appellee who is not an appellant
may assign errors in his brief where his purpose is to maintain the judgment on other grounds, but he
cannot seek modification or reversal of the judgment or affirmative relief unless he has also appealed.
(Franco v. Intermediate Appellate Court, 178 SCRA 331 [1989], citing La Campana Food Products, Inc.
v. Philippine Commercial and Industrial Bank, 142 SCRA 394 [1986]). Nevertheless, in order to fully
settle the issues so that the execution of the Court's decision in this case may not be needlessly delayed by
another petition, the Court resolved to take up the matter of effectivity of the holiday pay award raised by
Nestle.

Nestle insists that the reckoning period for the application of the holiday pay award is 1985 when
the Chartered Bank decision, promulgated on August 28, 1985, became final and executory, and not from
the date of effectivity of the Labor Code. Although the Court does not entirely agree with Nestle, we find
its claim meritorious.

In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132 SCRA 663 [1984],
hereinafter referred to as the IBAA case, the Court declared that Section 2, Rule IV, Book III of the
implementing rules and Policy Instruction No. 9, issued by the then Secretary of Labor on February 16,
1976 and April 23, 1976, respectively, and which excluded monthly paid employees from holiday pay
benefits, are null and void. The Court therein reasoned that, in the guise of clarifying the Labor Code's
provisions on holiday pay, the aforementioned implementing rule and policy instruction amended them
by enlarging the scope of their exclusion. The Chartered Bank case reiterated the above ruling and added
the "divisor" test.

However, prior to their being declared null and void, the implementing rule and policy instruction
enjoyed the presumption of validity and hence, Nestle's non-payment of the holiday benefit up to the
promulgation of the IBAA case on October 23, 1984 was in compliance with these presumably valid rule
and policy instruction.

In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the Court discussed the
effect to be given to a legislative or executive act subsequently declared invalid:

xxx xxx xxx

 . . . It does not admit of doubt that prior to the declaration of nullity such challenged
legislative or executive act must have been in force and had to be complied with. This is
so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to
obedience and respect. Parties may have acted under it and may have changed their
positions. What could be more fitting than that in a subsequent litigation regard be had to
what has been done while such legislative or executive act was in operation and
presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being
nullified, its existence as a fact must be reckoned with. This is merely to reflect
awareness that precisely because the judiciary is the government organ which has the
final say on whether or not a legislative or executive measure is valid, a period of time
may have elapsed before it can exercise the power of judicial review that may lead to a
declaration of nullity. It would be to deprive the law of its quality of fairness and justice
then, if there be no recognition of what had transpired prior to such adjudication.

In the language of an American Supreme Court decision: "The actual existence of a

statute, prior to such a determination of [unconstitutionality], is an operative fact and may
have consequences which cannot justly be ignored. The past cannot always be erased by
a new judicial declaration. The effect of the subsequent ruling as to invalidity may have
to be considered in various aspects, with respect to particular relations, individual and
corporate, and particular conduct, private and official." (Chicot County Drainage Dist. v.
Baxter States Bank, 308 US 371, 374 [1940]). This language has been quoted with
approval in a resolution in Araneta v. Hill (93 Phil. 1002 [1952]) and the decision
in Manila Motor Co., Inc. v. Flores (99 Phil. 738 [1956]). An even more recent instance
is the opinion of Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co.
(21 SCRA 1095 [1967]. (At pp. 434-435)

The "operative fact" doctrine realizes that in declaring a law or rule null and void, undue harshness and
resulting unfairness must be avoided. It is now almost the end of 1991. To require various companies to
reach back to 1975 now and nullify acts done in good faith is unduly harsh. 1984 is a fairer reckoning
period under the facts of this case.

Applying the aforementioned doctrine to the case at bar, it is not far-fetched that Nestle, relying on the
implicit validity of the implementing rule and policy instruction before this Court nullified them, and
thinking that it was not obliged to give holiday pay benefits to its monthly paid employees, may have
been moved to grant other concessions to its employees, especially in the collective bargaining
agreement. This possibility is bolstered by the fact that respondent Nestle's employees are among the
highest paid in the industry. With this consideration, it would be unfair to impose additional burdens on
Nestle when the non-payment of the holiday benefits up to 1984 was not in any way attributed to Nestle's
fault.

The Court thereby resolves that the grant of holiday pay be effective, not from the date of promulgation of
the Chartered Bank case nor from the date of effectivity of the Labor Code, but from October 23, 1984,
the date of promulgation of the IBAA case.

WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The divisor to be used in
computing holiday pay shall be 251 days. The holiday pay as above directed shall be computed from
October 23, 1984. In all other respects, the order of the respondent arbitrator is hereby AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. Nos. 117442-43 January 11, 1995

FEM'S ELEGANCE LODGING HOUSE, FENITHA SAAVEDRA and IRIES ANTHONY

SAAVEDRA, petitioners,
vs.
The Honorable LEON P. MURILLO, Labor Arbiter, Regional Arbitration Branch, Region X,
National Labor Relations Commission, Cagayan de Oro City, ALFONSO GALLETO, GEORGE
VEDAD, ROLAND PANTONIAL, REYNALDO DELAORAO, FELICISIMO BAQUILID,
CECILIO SAJOL, ANNABEL CASTRO, BENJAMIN CABRERA, RHONDEL PADERANGA,
ZENAIDA GUTIB, AIDA IMBAT and MARIA GRACE ATUEL, respondents.

RESOLUTION

QUIASON, J.:

This is a petition for certiorari under Rule 65 of the Revised Rules of court with temporary restraining
order to reverse and set aside the Order dated September 21, 1994 of the Labor Arbiter in the NLRC RAB
X Cases Nos. 10-04-00232 (-00233)-94.

Petitioner FEM's elegance Lodging House is a business enterprise engaged in providing lodging
accommodations. It is owned by petitioner Fenitha Saavedra and managed by petitioner Iries Anthony
Saavedra. Private respondents are former employees of petitioners whose services were terminated
between March and April, 1994.

Sometime after their dismissal from the employment of petitioners, private respondents separately filed
two cases against petitioners before the National Labor Relations Commission (NLRC), Regional
Arbitration Branch No. X, Cagayan de Oro City, docketed as NLRC RAB X Cases Nos. 10-04-00232-
(0023)-94. Private respondents sought for unpaid benefits such as minimum wage, overtime pay, rest day
pay, holiday pay, full thirteenth-month pay and separation pay (Rollo, pp. 40-42).

On May 31, 1994, a pre-arbitration conference of the cases took place before the Labor Arbiter. It was
agreed therein: (1) that both labor cases should be consolidated; and (2) that the parties would file their
respective position papers within thirty days from said date or until June 30, 1994, after which the cases
would be deemed submitted for resolution (Rollo, p. 14).

On June 29, petitioners filed their position paper. On July 7, they inquired from the NLRC whether
private respondents had filed their position paper. The receiving clerk of the NLRC confirmed that as of
said date private respondents had not yet filed their position paper.
The following events then transpired: on July 8, petitioners filed a Motion to dismiss for failure of private
respondents to file their position paper within the agreed period (Rollo, p. 38); on July 15, private
respondents belatedly filed their position paper; on July 18, petitioners filed a Motion to Expunge [private
respondents'] Position Paper from the records of the case (Rollo, p. 45); and on August 23, the Labor
Arbiter issued a notice of clarificatory hearing, which was set for September 7 (Rollo, p. 47). Prior to the
hearing, petitioners filed a Motion to Resolve [petitioners'] Motion to dismiss and Motion to Expunge
[private respondent'] Position Paper from the Records of the Case (Rollo, p. 48).

On September 21, the Labor Arbiter issued the order denying the motions filed by petitioners. He held
that a fifteen-day delay in filing the position paper was not unreasonable considering that the substantive
rights of litigants should not be sacrificed by technicality. He cited Article 4 of the Labor Code of the
Philippines, which provides that all doubts in the interpretation thereof shall be resolved in favor of labor.
He said that even under Section 15, Rule 5 of the Revised Rules of Court, a delay in the filing of a
position paper is not a ground for a motion to dismiss under the principle of exclusio unius est excludio
alterius (Rollo, pp. 51-52).

Hence, the present petition where petitioners charged the Labor Arbiter with grave abuse of discretion for
issuing the order in contravention of Section 3, Rule V of The New Rules of Procedure of the NLRC,
Said section provides:

Submission of Position Papers/Memorandum. . . . Unless otherwise requested in

writing by both parties, the Labor Arbiter shall direct both parties to
submit simultaneously their position papers/memorandum with the supporting documents
and affidavits within fifteen (15) calendar days from the date of the last conference, with
proof of having furnished each other with copies thereof (Emphasis supplied).

Petitioners claimed that they were denied due process and that the Labor Arbiter should have cited private
respondents in contempt for their failure to comply with their agreement in the pre-arbitration conference.

We dismiss the petition for failure of petitioners to exhaust their remedies, particularly in seeking redress
from the NLRC prior to the filing of the instant petition. Article 223 of the Labor code of the Philippines
provides that decisions, awards or orders of the Labor Arbiter are appealable to the NLRC. Thus,
petitioners should have first appealed the questioned order of the Labor Arbiter to the NLRC, and not to
this court. their omission is fatal to their cause.

However, even if the petition was given due course, we see no merit in petitioners' arguments. The delay
of private respondents in the submission of their position paper is a procedural flaw, and the admission
thereof is within the discretion of the Labor Arbiter.

Well-settled is the rule that technical rules of procedure are not binding in labor cases, for procedural
lapses may be disregarded in the interest of substantial justice, particularly where labor matters are
concerned (Ranara v. National Labor Relations commission, 212 SCRA 631 [1992]).

The failure to submit a position paper on time is not on of the grounds for the dismissal of a complaint in
labor cases (The New Rules of procedure of the NLRC, Rule V, Section 15). It cannot therefore be
invoked by petitioners to declare private respondents as non-suited. This stance is in accord with Article 4
of the Labor Code of the Philippines, which resolves that all doubts in the interpretation of the law and its
implementing rules and regulations shall be construed in favor of labor. Needless to state, our
jurisprudence is rich with decisions adhering to the State's basic policy of extending protection to Labor
where conflicting interests between labor and management exist (Aquino v. National Labor Relations
Commission, 206 SCRA 118 [1992]).

Petitioners cannot claim that they were denied due process inasmuch as they were able to file their
position paper. The proper party to invoke due process would have been private respondents, had their
position paper been expunged from the records for mere technicality. Since petitioners assert that their
defense is meritorious, it is to their best interest that the cases be resolved on the merits. In this manner,
the righteousness of their cause can be vindicated.

IN VIEW OF THE FOREGOING, the Court Resolved to DISMISS the petition for lack of merit.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-48605 December 14, 1981

DOMNA N. VILLAVERT, petitioner,

vs.
EMPLOYEES' COMPENSATION COMMISSION & GOVERNMENT SERVICE INSURANCE
SYSTEM (Philippine Constabulary), respondents.

FERNANDEZ, J.:

This is a petition to review the decision of the Employees' Compensation Commission in ECC Case No.
0692, entitled "Domna N. Villavert, appellant versus Government Service Insurance System (Philippine
Constabulary), respondents," affirming the decision of the Government Service Insurance System denying
the claim for death benefits. 1

The petitioner, Domna N. Villavert, is the mother of the late, Marcelino N. Villavert who died of acute
hemorrhagic pancreatitis on December 12, 1975 employed as a Code Verifier in the Philippine
Constabulary. She filed a claim for income benefits for the death of her son under P.D. No. 626 as
amended with the Government Service Insurance System on March 18, 1976. The said claim was denied
by the Government Service Insurance System on the ground that acute hemorrhagic pancreatitis is not an
occupational disease and that the petitioner had failed to show that there was a causal connection between
the fatal ailment of Marcelino N. Villavert and the nature of his employment.

The petitioner appealed to the Employees' Compensation Commission which affirmed on May 31, 1978
the decision of the respondent, Government Service Insurance System, denying the claim.

The record shows that in addition to his duties as Code Verifier, Marcelino N. Villavert also performed
the duties of a computer operator and clerk typist. In the morning of December 11, 1975, Marcelino
reported as usual to the Constabulary Computer Center at Camp Crame, Quezon City. He performed his
duties not only as code verifier but also handled administrative functions, computer operation and typing
jobs due to shortage of civilian personnel. Although he was complaining of chest pain and headache late
in the afternoon of December 11, 1975, after a whole day of strenuous activities, Marcelino was still
required to render overtime service until late in the evening of the same day, typing voluminous classified
communications, computing allowances and preparing checks for the salary of Philippine Constabulary
and Integrated National Police personnel throughout the country for distribution on or before December
15, 1975. He went home late at night and due to fatigue, he went to bed as soon as he arrived without
taking his meal. Shortly thereafter, Marcelino was noticed by his mother, the herein petitioner, gasping
for breath, perspiring profusely, and mumbling incoherent words. The petitioner tried to wake him up and
after all efforts to bring him to his senses proved futile, she rushed Marcelino to the UE Ramon
Magsaysay Memorial Hospital where he was pronounced dead at 5:30 o'clock in the morning of
December 12, 1975 without regaining consciousness. The case of death was acute hemorrhagic
pancreatitis.
To support the claim that Marcelino N. Villavert died of acute hemorrhagic pancreatitis as a result of his
duties as a code verifier, computer operator and typist of the Philippine Constabulary, the petitioner
submitted the following certification of Lt. Colonel Felino C. Pacheco Jr., commanding officer, of the
Philippine Constabulary, which reads:

THIS IS TO CERTIFY that MARCELINO N. VILLAVERT, a regular employee of the

Constabulary Computer Center, had been performing the following duty assignments in
this office in addition to his appointment as Coder Verifier before his death;

a. Computer Operator As computer operator he was subject to excessive heat and cold;

b. Clerk TypistAs typist he was responsible for typing important communications not
only for the office of the Constabulary Computer Center but also for other posts,
including engagement speeches of the Chief of Constabulary and other ranking officers
of the Command;

c. Due to the shortage of qualified civilian personnel to handle the task, he was given
excessive work responsibilities in the office which could have aggravated his ailment.

d. That more often he took his meals irregularly late in view of the nature of his work
especially during the preparation of checks for the salary of the Philippine Constabulary
and the National Integrated Police personnel throughout the country;

e. He used to perform rotation duties, thereby leaving him in sufficient time to consult the
Constabulary Medical Dispensary for routine physical check up about his health.

f. That subject employee never drinks alcoholic liquor, neither smokes nor engages on
immoral habits during his lifetime.

g. That he died in line of duty after retiring from his night shift.

This certification is being issued in behalf of legal heirs in order to justify their claim for
payment of benefits from the Employees' Compensation to reciprocate the services
rendered by the late Marcelino N. Villavert, a loyal and dedicated public servant. 2

The foregoing certification of Lt. Col. Felino C. Pacheco, Jr. was corroborated by the affidavit of Rustico
P. Valenzuela, Chief Clerk of the Constabulary Computer Center, which reads:

I, RUSTICO P. VALENZUELA, Master Sergeant, Philippine Constabulary, Filipino of

legal age, married and presently Chief Clerk of the Constabulary Computer Center, Camp
Crame, Quezon City after having been duly sworn to in accordance to law hereby depose
and say:

a. That as Chief Clerk I am responsible to my Commanding Officer about the accounting,

detail, duties, etc. of all military and civilian personnel in the office and therefore the
duties of the late Marcelino N. Villavert are personally known to me prior to his death;

b. That the late Marcelino N. Villavert although was appointed as Coder Verifier, still he
was instructed to perform extra additional workload due to shortage of qualified civilian
 personnel to handle administrative function, he being a graduate of the Computer
Operator and an expert typist which is seldom found among the qualities of civilian
personnel assigned in the Constabulary Computer Center;

c. That the late Marcelino N. Villavert was complaining of chest pain and headache prior
to his death but because of an urgent call to the service, although it necessitated his rest;
he was obliged to go on strenuous duty on the night of December 11, 1975, typing
voluminous classified communications, compute allowances and prepare checks for the
salary of Philippine Constabulary and Integrated National Police personnel throughout
the country for distribution on or before December 15, 1975, scheduled payday, thereby
aggravating his ailment due to excessive work, disposed to heat and cold, operating
computer machine and over fatigue that caused his sudden death;

d. That the late Marcelino N. Villavert before his death have insufficient time to consult
the Medical Dispensary for routine physical check-up due to the rotation of his duties and
therefore no record of his physical examination could be found in this Headquarters;

e. That the death of late Marcelino N. Villavert was service connected in view of the fact
that he died while in the performance of his official duties.

Affiant further sayeth none.

IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of August 1977 at
Quezon City.

(SGD) RUSTICO P. VALENZUEL

Affiant

SUBSCRIBED AND SWORN to before me this 22nd day of August 1977 at Quezon
City, Metro Manila. Affiant exhibited his Residence Certificate No. A-1183510 issued at
Taguig, Metro Manila on January 10, 1977.

(SGD) ENRIQUE C VILLANUEVA JR

1Lt. PC Administrative Officer 3

The Government Service Insurance System and the Employees' Compensation Commission denied the
claim for compensation on the ground that the petitioner did not present evidence that the illness of
Marcelino N. Villavert, acute hemorrhagic pancreatitis, was caused or aggravated by the nature of his
duties as employee of the Philippine Constabulary.

The Employees' Compensation Commission, citing a book on medicine, said:

In medical science, acute hemorrhagic pancreatitis is "acute inflammation with

hemorrhagic necrosis of the pancreas." It occurs most commonly in association with
alcoholism. The onset of the symptoms often occurs during or shortly after bouts of
alcoholic intoxication. It also occurs in association with biliary tract disease.
Occasionally, it occurs as a complication of peptic ulcer, mumps, viral hepatitis or
following the use of drugs such as glucocorticoids, or chlorothiazide. It is sometimes
 associated with metabolic disorders such as hyperpidemia and hyperparathyroidism. It
may also be associated with a genetic type of pancreatitis with onset in childhood.
Trauma is a relatively frequent cause of pancreatitis; it may result from a severe blow to
the abdomen, a penetrating injury from a bullet or knife wound, inadvertent trauma from
surgical procedures in the upper abdomen or rarely, electric shock. Approximately 20%
of the patients have no apparent underlying or predisposing cause. (Principles of Internal
Medicine by Harrison, 7th Edition, pp. 157) 4

However, the Medico Legal Officer of the National Bureau of Investigation stated that the exact cause of
acute hemorrhagic pancreatitis is still unknown despite extensive researches in this field, although most
research data are agreed that physical and mental stresses are strong causal factors in the development of
the disease. 5

From the foregoing facts of record, it is clear that Marcelino N. Villavert died of acute hemorrhagic
pancreatitis which was directly caused or at least aggravated by the duties he performed as coder verifier,
computer operator and clerk typist of the Philippine Constabulary. There is no evidence at all that
Marcelino N. Villavert had a "bout of alcoholic intoxication" shortly before he died. Neither is there a
showing that he used drugs.

It should be noted that Article 4 of the Labor Code of the Philippines, as amended, provides that "All
doubts in the implementation and interpretation of this Code, including its implementing rules and
regulations shall be resolved in favor of labor."

WHEREFORE, the decision of the Employees' Compensation Commission sought to be reviewed is set
aside and judgment is hereby rendered ordering the Government Service Insurance System to pay the
petitioner death benefits in the amount of SIX THOUSAND PESOS (P6,000.00).

SO ORDERED.

Teehankee (Chairman), Makasiar, Guerrero and Plana, JJ., concur.

Separate Opinions

MELENCIO-HERRERA, J., dissenting.

Section 1 (b), Rule III of the Amended Rules on Employees' Compensation explicitly provides:

SECTION 1.

xxxxxxxxx

(b) For the sickness and the resulting disability or death to be compensable, the sickness
must be the result of an occupational disease annotated under Annex "A" of these rules
 with the conditions set therein satisfied; otherwise, proof must be shown that the risk of
contracting the disease is increased by the working conditions (emphasis supplied).

The cause of death of petitioner's son was acute hemorrhagic pancreatitis. This disease is not one of those
listed, even under the additional listing, as an occupational disease in Annex "A" of the Amended Rules
on Employees Compensation. Neither did petitioner present evidence to prove that the risk of contracting
hemorrhagic pancreatitis was increased by the working conditions surrounding her son's employment as
code verifier, computer operator and typist of the Philippine Constabulary. For which reasons, the
Government Service Insurance System and the Employees' Compensation Commission denied the claim
for compensation.

That physical and mental stresses are strong causal factors in the development of the disease, as stated by
the Medico Legal Officer of the National Bureau of Investigation is not scientifically confirmed "research
data." Medical science still associates the disease with alcoholism, binary tract disease, the use of drugs,
or trauma, among others. In fact, the exact cause is still unknown. Medical reports indicate that
approximately 20% of the patients suffering from that disease have no apparent underlying or
predisposing cause.

The illness of petitioner's son not having been caused nor aggravated by the nature of his duties as an
employee of the Philippine Constabulary, petitioner's claim is not compensable under explicit provisions
of existing laws.

Separate Opinions

MELENCIO-HERRERA, J., dissenting.

Section 1 (b), Rule III of the Amended Rules on Employees' Compensation explicitly provides:

SECTION 1.

xxxxxxxxx

(b) For the sickness and the resulting disability or death to be compensable, the sickness
must be the result of an occupational disease annotated under Annex "A" of these rules
with the conditions set therein satisfied; otherwise, proof must be shown that the risk of
contracting the disease is increased by the working conditions (emphasis supplied).

The cause of death of petitioner's son was acute hemorrhagic pancreatitis. This disease is not one of those
listed, even under the additional listing, as an occupational disease in Annex "A" of the Amended Rules
on Employees Compensation. Neither did petitioner present evidence to prove that the risk of contracting
hemorrhagic pancreatitis was increased by the working conditions surrounding her son's employment as
code verifier, computer operator and typist of the Philippine Constabulary. For which reasons, the
Government Service Insurance System and the Employees' Compensation Commission denied the claim
for compensation.
That physical and mental stresses are strong causal factors in the development of the disease, as stated by
the Medico Legal Officer of the National Bureau of Investigation is not scientifically confirmed "research
data." Medical science still associates the disease with alcoholism, binary tract disease, the use of drugs,
or trauma, among others. In fact, the exact cause is still unknown. Medical reports indicate that
approximately 20% of the patients suffering from that disease have no apparent underlying or
predisposing cause.

The illness of petitioner's son not having been caused nor aggravated by the nature of his duties as an
employee of the Philippine Constabulary, petitioner's claim is not compensable under explicit provisions
of existing laws.
 SECOND DIVISION

[G.R. No. 58176. March 23, 1984.]

RUTH JIMENEZ, Petitioner, v. EMPLOYEES COMPENSATION COMMISSION and

GOVERNMENT SERVICE INSURANCE SYSTEM, Respondents.

Isidro Pasana for Petitioner.

The Solicitor General for Respondents.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYEES COMPENSATION

COMMISSION; COMPENSABILITY OF ILLNESS; CANCER OF THE LUNGS, A BORDERLINE
CASE REQUIRING STUDY OF CIRCUMSTANCES OF CASE. Admittedly, cancer of the lungs
(bronchogenic carcinoma) is one of those borderline cases where a study of the circumstances of the case
is mandated to fully appreciate whether the nature of the work of the deceased increased the possibility of
contracting such an ailment. WE have ruled in the case of Dator v. Employees Compensation
Commission (111 SCRA 634, L-57416, January 30, 1982) that" (U)ntil now, the cause of cancer is not
known." Indeed, the respondent has provided an opening through which petitioner can pursue and did
pursue the possibility that the deceaseds ailment could have been caused by the working conditions while
employed with the Philippine Constabulary. Respondents maintain that the deceased was a smoker and
the logical conclusion is that the cause of the fatal lung cancer could only be smoking which cannot in
any way be justified as work-connected. However, medical authorities support the conclusion that up to
now, the etiology or cause of cancer of the lungs is still largely unknown.

2. ID.; ID.; ID.; ID.; CONCLUSION OF COMMISSION NOT IN ACCORDANCE WITH MEDICAL
AUTHORITIES AND FACTS ON RECORD. The sweeping conclusion of the respondent Employees
Compensation Commission to the effect that the cause of the bronchogenic carcinoma of the deceased
was due to his being a smoker and not in any manner connected with his work as a soldier, is not in
accordance with medical authorities nor with the facts on record. No certitude can arise from a position of
uncertainty. WE are dealing with possibilities and medical authorities have given credence to the stand of
the petitioner that her husband developed bronchogenic carcinoma while working as a soldier with the
Philippine Constabulary. The records show that when the deceased enlisted with the Philippine
Constabulary in 1969, he was found to be physically and mentally healthy. A soldiers life is a hard one.
As a soldier assigned to field duty, exposure to the elements, dust and dirt, fatigue and lack of sleep and
rest is a common occurrence. Exposure to chemicals while handling ammunition and firearms cannot be
discounted. WE take note also of the fact that he became the security of one Dr. Emilio Cordero of
Anulung, Cagayan, and he always accompanied the doctor wherever the latter went (p. 26, rec.). Such
assignment invariably involved irregular working hours, exposure to different working conditions, and
body fatigue, not to mention psychological stress and other similar factors which influenced the evolution
of his ailment.
3. ID.; ID.; ID.; ID.; THEORY OF INCREASED RISK. The theory of increased risk is applicable in
the case at bar. In the case of Cristobal v. ECC (103 SCRA, 336-337) where the Court held that "to
establish compensability under the said theory, the claimant must show proof of work-connection.
Impliedly, the degree of proof required is merely substantial evidence, which means such relevant
evidence to support a decision (Ang Tibay v. The Court of Industrial Relations and National Labor
Union, Inc., 69 Phil. 635) or clear and convincing evidence. In this connection, it must be pointed out that
the strict rules of evidence are not applicable in claims for compensation. Respondents however insist on
evidence which would establish direct causal relation between the disease rectal cancer and the
employment of the deceased. Such a strict requirement which even medical experts cannot support
considering the uncertainty of the nature of the disease would negate the principle of the liberality in the
matter of evidence. Apparently, what the law merely requires is a reasonable work-connection and not a
direct causal relation. This kind of interpretation gives meaning and substance to the liberal and
compassionate spirit of the law as embodied in Article 4 of the new Labor Code which states that all
doubts in the implementation of the provisions of this Code, including its implementing rules and
regulations shall be resolved in favor of labor."cralaw virtua1aw library

4. ID.; ID.; ID.; STRICT RULES ON EVIDENCE NOT APPLICABLE; STATE POLICY OF
LIBERALITY TOWARDS LABOR MUST BE MAINTAINED. In San Valentin v. ECC (118 SCRA
160), the Court held that "In compensation cases, strict rules on evidence are not applicable. A reasonable
work-connection is all that is required or that the risk of contracting the disease is increased by the
working condition." This is in line with the avowed policy of the State as mandated by the Constitution
(Art. II, Sec. 9) and restated in the New Labor Code (Art. 4) to give maximum aid and protection to labor.

DECISION

MAKASIAR, J.:

This is a petition to review the decision of respondent Employees Compensation Commission (ECC)
dated August 20, 1981 (Annex "A", Decision, pp. 10-12, rec.) in ECC Case No. 1587, which affirmed the
decision of respondent Government Service Insurance System (GSIS), denying petitioners claim for
death benefits under Presidential Decree No. 626, as amended.

The undisputed facts are as follows:chanrob1es virtual 1aw library

Petitioner is the widow of the late Alfredo Jimenez, who joined the government service in June, 1969 as a
constable in the Philippine Constabulary (p. 2, rec.)

After rendering service for one year, he was promoted to the rank of constable second class. On
December 16, 1974, he was again promoted to the rank of sergeant (p. 26, rec.)

Sometime in April, 1976, he and his wife boarded a bus from Tuguegarao, Cagayan, to Anulung,
Cagayan. While on their way, Sgt. Jimenez, who was seated on the left side of the bus, fell down from the
bus because of the sudden stop of the vehicle. As a result, he was confined at the Cagayan Provincial
Hospital for about one (1) week, and thereafter, released (comment of respondent ECC, pp. 25-36, rec.).
He was again confined for further treatment from November 7, 1978 to May 16, 1979 at the AFP Medical
Center in Quezon City.
While on duty with the 111th PC Company, Tuguegarao, Cagayan, he was assigned as security to one Dr.
Emilio Cordero of Anulung, Cagayan (ECC rec., Proceedings of the PC Regional Board, June 6, 1980).
In compliance with his duty, he always accompanied the doctor wherever the latter went (p. 26, rec.)
virtualawlibrary

On November 7, 1978, the deceased was again confined at the Cagayan Provincial Hospital and then
transferred to the AFP V. Luna Medical Center at Quezon City for further treatment. He complained of
off-and-on back pains, associated with occasional cough and also the swelling of the right forearm. The
doctors found a mass growth on his right forearm, which grew to the size of 3 by 2 inches, hard and
associated with pain, which the doctors diagnosed as "aortic aneurysm, medrastinal tumor" (p. 27, rec.)

His condition improved somewhat after treatment and he was released on May 16, 1979. He was advised
to have complete rest and to continue medication. He was then given light duty inside the barracks of
their company.

Unfortunately, his ailment continued and became more serious.

On May 12, 1980, he died in his house at Anulung, Cagayan, at about 9:00 oclock in the evening. He
was barely 35 years old at the time of his death.

The cause of death, as found by the doctors, is "bronchogenic carcinoma" which is a malignant tumor of
the lungs.

On June 6, 1980, an administrative hearing was conducted before the PC Regional Board. It was their
official findings that the subject enlisted man "died in line of duty" ; that the deceased was a PC member
of the 111th PC Company at Tuguegarao, Cagayan; that he died due to "bronchogenic CA" ; and that he
"died not as a result of his misconduct and did not violate any provisions of the Articles of War" (ECC
rec., Proceedings of the PC Regional Board, June 6, 1980).

The Board recommended "that all benefits due to or become due subject EP be paid and settled to his
legal heirs" (ECC rec., Proceedings of the PC Regional Board, June 6, 1980). Thus, as per records of the
GSIS, petitioner was paid benefits due to her deceased husband under Republic Act No. 610 (Comment of
respondent ECC, p. 27, rec.)cralawnad

Nevertheless, petitioner filed a claim for death benefits under PD No. 626, as amended with the
respondent GSIS. Said claim was denied by the GSIS on the ground that her husbands death is not
compensable "for the reason that the injury/sickness that caused his death is not due to the circumstances
of the employment or in the performance of the duties and responsibilities of said employment" (Letter of
denial by the GSIS dated July 14, 1980, ECC rec.)

The said decision was affirmed by respondent Employees Compensation Commission in its decision
dated August 21, 1981, stating among others:chanrob1es virtual 1aw library

x x x

"After an exhausted (sic) study of the evidences (sic) on record and the applicable law on the case, we
conclude that the law has been properly applied by the respondent System. . . .

"Bronchogenic carcinoma, medical authorities disclose, is the most common form of malignancy in males
reaching a peak between the fifth and seventh decades and accounting for one in four male cancer deaths.
The sex incidence is at least 5 to 1, male to female. Extensive statistical analysis by medical authorities
have confirmed the relationship between lung cancer and cigarette smoking. Other factors that may have
potential roles are exposure to ionizing radiation, exposure to chromates, metallic iron and iron oxides,
arsenic, nickel, beryllium and asbestos (Harrisons Principles of Internal Medicine by Wintrobe, Et Al.,
7th Edition, p. 1322).

"Although Presidential Decree No. 626, as amended, was envisioned to give relief to workingmen, who
sustain an injury or contract an ailment in the course of employment and that to best attain its lofty
objective, a liberal interpretation of the law should pervade in its implementation, this precept, however,
may not be invoked as not even a slight causal link between the development of the ailment and the
decedents (sic) duties and working conditions as a PC sergeant could be deduced from the records of this
case. The respondent Systems ruling that appellants claim does not fall within the beneficiant provisions
of Presidential Decree No. 626, as amended, and therefore the same should be denied, is in full harmony
with the law and the facts obtaining herein.

. . ." (Decision, pp. 10-12, rec.)

On September 28, 1981, Petitioner, assisted by counsel, filed the instant petition, the only pertinent issue
being whether or not her husbands death from bronchogenic carcinoma is compensable under the law.

The petitioner contends that her husbands death is compensable and that respondent Commission erred in
not taking into consideration the uncontroverted circumstance that when the deceased entered into the
Philippine Constabulary, he was found to be physically and mentally healthy. She farther contends that as
a soldier, her husbands work has always been in the field where exposure to the elements, dust and dirt,
fatigue and lack of sleep and rest was the rule rather than the exception. The nature of work of a soldier
being to protect life and property of citizens, he was subject to call at any time of day or night.
Furthermore, he was even assigned as security to one Emilio Cordero and always accompanied the latter
wherever he went. Exposed to these circumstances for several years, the deceaseds physical constitution
began to deteriorate, which eventually resulted to his death from bronchogenic carcinoma (Petition, pp. 2-
9, rec.)

On the other hand, respondent Commission maintains that while the deceased soldier may have been
exposed to elements of dust and dirt and condition of lack of rest and continued fatigue by virtue of his
duties to protect the life and property of the citizens, such conditions have no causal relation to his
contraction of bronchogenic carcinoma. It is also the opinion of the respondent that since there is
evidence of the deceased to be a smoker, "the late Sgt. Jimenez may have indulged heavily in smoking
and drinking, not merely occasionally. And it has been demonstrated medically that the more cigarettes
a person smokes, the greater the risk of developing lung cancer" (Memorandum, p. 62, rec.). In short, the
respondent alleges that the deceased was responsible to a large degree for his having contracted
bronchogenic carcinoma that led to his demise.cralawnad

WE find the petitioners claim meritorious.

Primary carcinoma of the lung is the most common fatal cancer and its frequency is increasing (The
Merck Manual, 13th Edition, p. 647). Admittedly, cancer of the lungs (bronchogenic carcinoma) is one of
those borderline cases where a study of the circumstances of the case is mandated to fully appreciate
whether the nature of the work of the deceased increased the possibility of contracting such an ailment. In
the case of Laron v. Workmens Compensation Commission (73 SCRA 90), WE held, citing Schmidts
Attorneys Dictionary of Medicine, 165 Sup. 143; Beerman v. Public Service Coordinated Transport, 191
A 297, 299; Words and Phrases, 6 Permanent Edition 61, "The English word cancer means crab, in the
medical sense, it refers to a malignant, usually fatal, tumor or growth." Findings of fact by the respondent
points out that bronchogenic carcinoma is a malignant tumor of the lungs. WE have ruled in the case of
Dator v. Employees Compensation Commission (111 SCRA 634, L-57416, January 30, 1982) that"
(U)ntil now, the cause of cancer is not known." Indeed, the respondent has provided an opening through
which petitioner can pursue and did pursue the possibility that the deceaseds ailment could have been
caused by the working conditions while employed with the Philippine Constabulary.

Respondents maintain that the deceased was a smoker and the logical conclusion is that the cause of the
fatal lung cancer could only be smoking which cannot in any way be justified as work-connected.
However, medical authorities support the conclusion that up to now, the etiology or cause of cancer of the
lungs is still largely unknown as provided for in the following:jgc:.com.ph

"Although the etiology of cancer in humans cannot yet be explained at the molecular level, it is clear that
genetic composition of the host is important in cancer induction. Related immunologic factors may
predispose the host to a putative carcinogen. There is some evidence that viruses may play a role in the
neoplastic process. In addition, both environmental and therapeutic agents have been identified of
carcinogens" (Harrison, Principles of Internal Medicine, 9th Edition, 1980, p. 1584).

"Considerable attention has been directed to the potential role of air pollution exposure to ionizing
radiation and numerous occupational hazards, including exposure to chromates, metallic iron and iron
oxides, arsenic, nickel, beryllium and asbestos" (Harrison, Ibid, p. 1259).

"The lungs are the site of origin of primary benign and malignant tumors and receive metastases from
many other organs and tissues. Specific causes have not been established but a strong dose-related
statistical association exists between cigarette smoking and squamous cell and undifferentiated small (oat)
cell bronchogenic carcinomas. There is suggestive evidence that prolonged exposure to air pollution
promotes lung neoplasms" (The Merck Manual, 13th Edition, p. 647).

"What emerges from such concepts is the belief that cancers in man do not appear suddenly out of the
blue. . . . Moreover, there need not be a single etiology or pathogenesis. Many influences may be at work
during the evolution of the lesion and many pathways may be involved. Indeed, the term cancer may
embrace a multiplicity of diseases of diverse origins" (Robbins, Pathologic Basis of Disease, 2nd Edition,
1979, p. 185, Emphasis supplied).

WE cannot deny the fact that the causes of the illness of the deceased are still unknown and may embrace
such diverse origins which even the medical sciences cannot tell with reasonable certainty. Indeed,
scientists attending the World Genetic Congress in New Delhi, India, have warned that about 25,000
chemicals used around the world could potentially cause cancer, and Lawrence Fishbein of the U.S.
National Center for Toxilogical Research pointed out that humans were daily exposed to literally
hundreds of chemical agents via air, food, medication, both in their industrial home and environments
(Evening Post, December 16, 1983, p. 3, cols. 2-3).

The theory of increased risk is applicable in the instant case. WE had the occasion to interpret the theory
of increased risk in the case of Cristobal v. Employees Compensation Commission (103 SCRA, 336-337,
L-49280, February 26, 1981):.com.ph : virtual law library

"To establish compensability under the said theory, the claimant must show proof of work-connection.
Impliedly, the degree of proof required is merely substantial evidence, which means such relevant
evidence to support a decision (Ang Tibay v. The Court of Industrial Relations and National Labor
Union, Inc., 69 Phil. 635) or clear and convincing evidence. In this connection, it must be pointed out that
the strict rules of evidence are not applicable in claims for compensation. Respondents however insist on
evidence which would establish direct causal relation between the disease rectal cancer and the
employment of the deceased. Such a strict requirement which even medical experts cannot support
considering the uncertainty of the nature of the disease would negate the principle of the liberality in the
matter of evidence, Apparently, what the law merely requires is a reasonable work-connection and not a
direct causal relation. This kind of interpretation gives meaning and substance to the liberal and
compassionate spirit of the law as embodied in Article 4 of the new Labor Code which states that all
doubts in the implementation of the provisions of this Code, including its implementing rules and
regulations shall be resolved in favor of labor.

". . . As the agents charged by the law to implement the social justice guarantee secured by both 1935 and
1973 Constitutions, respondents should adopt a more liberal attitude in deciding claims for compensation
especially when there is some basis in the facts inferring a work-connection. This should not be confused
with the presumption of compensability and theory of aggravation under the Workmens Compensation
Act. While these doctrines may have been abandoned under the New Labor Code (the constitutionality of
such abrogation may still be challenged), it is significant that the liberality of the law, in general, still
subsists. . . ." (Emphasis supplied)

The sweeping conclusion of the respondent Employees Compensation Commission to the effect that the
cause of the bronchogenic carcinoma of the deceased was due to his being a smoker and not in any
manner connected with his work as a soldier, is not in accordance with medical authorities nor with the
facts on record. No certitude can arise from a position of uncertainty.

WE are dealing with possibilities and medical authorities have given credence to the stand of the
petitioner that her husband developed bronchogenic carcinoma while working as a soldier with the
Philippine Constabulary. The records show that when the deceased enlisted with the Philippine
Constabulary in 1969, he was found to be physically and mentally healthy. A soldiers life is a hard one.
As a soldier assigned to field duty, exposure to the elements, dust and dirt, fatigue and lack of sleep and
rest is a common occurrence. Exposure to chemicals while handling ammunition and firearms cannot be
discounted. WE take note also of the fact that he became the security of one Dr. Emilio Cordero of
Anulung, Cagayan, and he always accompanied the doctor wherever the latter went (p. 26, rec.). Such
assignment invariably involved irregular working hours, exposure to different working conditions, and
body fatigue, not to mention psychological stress and other similar factors which influenced the evolution
of his ailment.

WE held in the case of San Valentin v. Employees Compensation Commission (118 SCRA 160)
that:jgc:.com.ph

"x x x

"In compensation cases. strict rules of evidence are not applicable. A reasonable work-connection is all
that is required or that the risk of contracting the disease is increased by the working conditions."cralaw
virtua1aw library

In the case of Dator v. Employees Compensation Commission

(L-57416, January 30, 1982), WE held the death of Wenifreda Dator, a librarian for 15 years, caused by
bronchogenic carcinoma compensable. Being a librarian, "she was exposed to duty books and other
deleterious substances in the library under unsanitary conditions" (Ibid., 632). WE do not see any reason
to depart from the ruling in the said case, considering that a soldiers duties and environment are more
hazardous.

This is in line with the avowed policy of the State as mandated by the Constitution (Article II, Section 9)
and restated in the new Labor Code (Article 4), to give maximum aid and protection to labor.

WHEREFORE, THE DECISION APPEALED FROM IS HEREBY SET ASIDE AND THE
GOVERNMENT SERVICE INSURANCE SYSTEM IS HEREBY ORDERED.

1. TO PAY THE PETITIONER THE SUM OF TWELVE THOUSAND (P12,000.00) PESOS AS

DEATH BENEFITS;

2. TO REIMBURSE THE PETITIONERs MEDICAL AND HOSPITAL EXPENSES DULY

SUPPORTED BY PROPER RECEIPTS; AND

3. TO PAY THE PETITIONER THE SUM OF ONE THOUSAND TWO HUNDRED (P1,200.00)
PESOS FOR BURIAL EXPENSES.

SO ORDERED.

Concepcion, Jr., Guerrero, Abad Santos, De Castro and Escolin, JJ., concur.

Separate Opinions

AQUINO, J., dissenting:chanrob1es virtual 1aw library

I dissent. Bronchogenic carcinoma was not work-connected. The ECC did not err in denying death
benefits.
 FIRST DIVISION

[G.R. Nos. 50999-51000. March 23, 1990.]

JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, Petitioners, v. NATIONAL

LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR ARBITER FLAVIO AGUAS,
and F.E. ZUELLIG (M), INC., Respondents.

Raul E. Espinosa, for Petitioners.

Lucas Emmanuel B. Canilao for petitioner A. Manuel.

Atienza, Tabara, Del Rosario & Castillo for Private Respondent.

SYLLABUS

1. LABOR LAW; NATIONAL LABOR RELATIONS COMMISSION; SEPARATION PAY;

ALLOWANCES AND EARNED COMMISSIONS INCLUDED IN THE MONTHLY SALARY IN
THE COMPUTATION THEREOF. Insofar as the issues of whether or not allowances should be
included in the monthly salary of petitioners for the purpose of computation of their separation pay is
concerned, this has been settled in the case of Santos v. NLRC, Et Al., G.R. No. 76721, September 21,
1987, 154 SCRA 166, where We ruled that "in the computation of backwages and separation pay, account
must be taken not only of the basic salary of petitioner but also of her transportation and emergency living
allowances." This ruling was reiterated in Soriano v. NLRC, Et Al., G.R. No. 75510, October 27, 1987,
155 SCRA 124 and recently, in Planters Products, Inc. v. NLRC, Et Al., G.R. No. 78524, January 20,
1989. Inasmuch as the words "wages", "pay" and "salary" have the same meaning, and commission is
included in the definition of "wage", the logical conclusion, therefore, is, in the computation of the
separation pay of petitioners, their salary base should include also their earned sales commissions.

2. ID.; ID.; TERM "WAGES" INCLUDE COMMISSIONS. Article 97(f) by itself is explicit that
commission is included in the definition of the term "wage." It has been repeatedly declared by the courts
that where the law speaks in clear and categorical language, there is no room for interpretation or
construction; there is only room for application (Cebu Portland Cement Co. v. Municipality of Naga, G.R.
Nos. 24116-17, August 22, 1968, 24 SCRA 708; Gonzaga v. Court of Appeals, G.R. No. L-27455, June
28, 1973, 51 SCRA 381). A plain and unambiguous statute speaks for itself, and any attempt to make it
clearer is vain labor and tends only to obscurity.

3. ID.; ID.; SYNONYMOUS TO "SALARY" AND "PAY." The ambiguity between Article 97(f),
which defines the term wage and Article XIV of the Collective Bargaining Agreement, Article 284 of
the Labor Code and Sections 9(b) and 10 of the Implementing Rules, which mention the terms "pay" and
"salary", is more apparent than real. Broadly, the word "salary" means a recompense or consideration
made to a person for his pains or industry in another mans business. Whether it be derived from
"salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the fundamental
idea of compensation for services rendered. Indeed, there is eminent authority for holding that the words
"wages" and "salary" are in essence synonymous (Words and Phrases, Vol. 38 Permanent Edition, p. 44
citing Hopkins v. Cromwell, 85 N.Y.S. 839, 841, 89 App. Div. 481; 38 Am. Jur. 496). "Salary," the
etymology of which is the Latin word "salarium," is often used interchangeably with "wage", the
etymology of which is the Middle English word "wagen." Both words generally refer to one and the same
meaning, that is, a reward or recompense for services performed. Likewise, "pay" is the synonym of
"wages" and "salary" (Blacks Law Dictionary, 5th Ed.).

4. ID.; ID.; ID.; COMMISSION; DEFINED. We agree with the Solicitor General that granting, in
gratia argumenti, that the commissions were in the form of incentives or encouragement, so that the
petitioners would be inspired to put a little more industry on the jobs particularly assigned to them, still
these commissions are direct remunerations for services rendered which contributed to the increase of
income of Zuellig. Commission is the recompense, compensation or reward of an agent, salesman,
executor, trustees, receiver, factor, broker or bailee, when the same is calculated as a percentage on the
amount of his transactions or on the profit to the principal (Blacks Law Dictionary, 5th Ed., citing
Weiner v. Swales, 217 Md. 123, 141 A. 2d 749, 750). The nature of the work of a salesman and the
reason for such type of remuneration for services rendered demonstrate clearly that commissions are part
of petitioners wage or salary.

5. ID.; ID.; ID.; ID.; BASIS IN THE COMPUTATION THEREOF. In Soriano v. NLRC, Et Al.,
supra, in resolving the issue of the salary base that should be used in computing the separation pay, We
held that: "The commissions also claimed by petitioner (override commission plus net deposit
incentive) are not properly includible in such base figure since such commissions must be earned by
actual market transactions attributable to petitioner." Applying this by analogy, since the commissions in
the present case were earned by actual market transactions attributable to petitioners, these should be
included in their separation pay. In the computation thereof, what should be taken into account is the
average commissions earned during their last year of employment.

6. ID.; INTERPRETATION OF THE LABOR CODE AND ITS IMPLEMENTING RULES AND
REGULATIONS; SHALL BE RESOLVED IN FAVOR OF THE WORKINGMEN. In carrying out
and interpreting the Labor Codes provisions and its implementing regulations, the workingmans welfare
should be the primordial and paramount consideration. This kind of interpretation gives meaning and
substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the Labor Code
which states that "all doubts in the implementation and interpretation of the provisions of the Labor Code
including its implementing rules and regulations shall be resolved in favor of labor" (Abella v. NLRC,
G.R. No. 71812, July 30, 1987, 152 SCRA 140; Manila Electric Company v. NLRC, Et Al., G.R. No.
78763, July 12, 1989), and Article 1702 of the Civil Code which provides that "in case of doubt, all labor
legislation and all labor contracts shall be construed in favor of the safety and decent living for the
laborer.

DECISION

MEDIALDEA, J.:

This is a petition for certiorari seeking to modify the decision of the National Labor Relations
Commission in NLRC Case No. RB-IV-20840-78-T entitled, "Jose Songco and Romeo Cipres,
Complainants-Appellants, v. F.E. Zuellig (M), Inc., Respondent-Appellee" and NLRC Case No. RN-IV-
20855-78-T entitled, "Amancio Manuel, Complainant-Appellant, v. F.E. Zuellig (M), Inc., Respondent-
Appellee," which dismissed the appeal of petitioners herein and in effect affirmed the decision of the
Labor Arbiter ordering private respondent to pay petitioners separation pay equivalent to their one month
salary (exclusive of commissions, allowances, etc.) for every year of service.

The antecedent facts are as follows:chanrob1es virtual 1aw library

Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig) filed with the Department of
Labor (Regional Office No. 4) an application seeking clearance to terminate the services of petitioners
Jose Songco, Romeo Cipres, and Amancio Manuel (hereinafter referred to as petitioners) allegedly on the
ground of retrenchment due to financial losses. This application was seasonably opposed by petitioners
alleging that the company is not suffering from any losses. They alleged further that they are being
dismissed because of their membership in the union. At the last hearing of the case, however, petitioners
manifested that they are no longer contesting their dismissal. The parties then agreed that the sole issue to
be resolved is the basis of the separation pay due to petitioners. Petitioners, who were in the sales force of
Zuellig received monthly salaries of at least P400.00. In addition, they received commissions for every
sale they made..com:cralaw:red

The Collective Bargaining Agreement entered into between Zuellig and F.E. Zuellig Employees
Association, of which petitioners are members, contains the following provision (p. 71,
Rollo):jgc:.com.ph

"ARTICLE XIV Retirement Gratuity.

"Section 1(a) Any employee, who is separated from employment due to old age, sckness, death or
permanent lay-off not due to the fault of said employee shall receive from the company a retirement
gratuity in an amount equivalent to one (1) months salary per year of service. One month of salary as
used in this paragraph shall be deemed equivalent to the salary at date of retirement; years of service shall
be deemed equivalent to total service credits, a fraction of at least six months being considered one year,
including probationary employment. (Emphasis supplied).

On the other hand, Article 284 of the Labor Code then prevailing provides:jgc:.com.ph

"Art. 284. Reduction of personnel. The termination of employment of any employee due to the
installation of labor saving-devices, redundancy, retrenchment to prevent losses, and other similar causes,
shall entitle the employee affected thereby to separation pay. In case of termination due to the installation
of labor-saving devices or redundancy, the separation pay shall be equivalent to one (1) month pay or to
at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to
prevent losses and other similar causes, the separation pay shall be equivalent to one (1) month pay or at
least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year." (Emphasis supplied) lawlibrary : rednad

In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules Implementing the Labor Code provide:
rob1es virtual 1aw library

x x x

"Sec. 9(b). Where the termination of employment is due to retrenchment initiated by the employer to
prevent losses or other similar causes, or where the employee suffers from a disease and his continued
employment is prohibited by law or is prejudicial to his health or to the health of his co-employees, the
employee shall be entitled to termination pay equivalent at least to his one month salary, or to one-half
month pay for every year of service, whichever is higher, a fraction of at least six (6) months being
considered as one whole year.

x x x

"Sec. 10. Basis of termination pay. The computation of the termination pay of an employee as
provided herein shall be based on his latest salary rate, unless the same was reduced by the employer to
defeat the intention of the Code, in which case the basis of computation shall be the rate before its
deduction." (Emphasis supplied)

On June 26, 1978, the Labor Arbiter rendered a decision, the dispositive portion of which reads (p. 78,
Rollo):jgc:.com.ph

"RESPONSIVE TO THE FOREGOING, respondent should be as it is hereby, ordered to pay the

complainants separation pay equivalent to their one month salary (exclusive of commissions, allowances,
etc.) for every year of service that they have worked with the company.

"SO ORDERED."cralaw virtua1aw library

The appeal by petitioners to the National Labor Relations Commission was dismissed for lack of merit.

Hence, the present petition.

On June 2, 1980, the Court, acting on the verified "Notice of Voluntary Abandonment and Withdrawal of
Petition" dated April 7, 1980 filed by petitioner Romeo Cipres, based on the ground that he wants "to
abide by the decision appealed from" since he had "received, to his full and complete satisfaction, his
separation pay," resolved to dismiss the petition as to him.

The issue is whether or not earned sales commissions and allowances should be included in the monthly
salary of petitioners for the purpose of computation of their separation pay.

The petition is impressed with merit.

Petitioners position was that in arriving at the correct and legal amount of separation pay due them,
whether under the Labor Code or the CBA, their basic salary, earned sales commissions and allowances
should be added together. They cited Article 97(f) of the Labor Code which includes commission as part
of ones salary, to wit:.com:cralaw:red

"(f) Wage paid to any employee shall mean the remuneration or earnings, however designated, capable
of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission
basis, or other method of calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for services rendered or to be
rendered, and includes the fair and reasonable value, as determined by the Secretary of Labor, of board,
lodging, or other facilities customarily furnished by the employer to the employee.Fair and reasonable
value shall not include any profit to the employer or to any person affiliated with the employer."cralaw
virtua1aw library

Zuellig argues that if it were really the intention of the Labor Code as well as its implementing rules to
include commission in the computation of separation pay, it could have explicitly said so in clear and
unequivocal terms. Furthermore, in the definition of the term "wage", "commission" is used only as one
of the features or designations attached to the word remuneration or earnings.

Insofar as the issue of whether or not allowances should be included in the monthly salary of petitioners
for the purpose of computation of their separation pay is concerned, this has been settled in the case of
Santos v. NLRC, Et Al., G.R. No. 76721, September 21, 1987, 154 SCRA 166, where We ruled that "in
the computation of backwages and separation pay, account must be taken not only of the basic salary of
petitioner but also of her transportation and emergency living allowances." This ruling was reiterated in
Soriano v. NLRC, Et Al., G.R. No. 75510, October 27, 1987, 155 SCRA 124 and recently, in Planters
Products, Inc. v. NLRC, Et Al., G.R. No. 78524, January 20, 1989. virtual lawlibrary

We shall concern ourselves now with the issue of whether or not earned sales commissions should be
included in the monthly salary of petitioners for the purpose of computation of their separation pay.

Article 97(f) by itself is explicit that commission is included in the definition of the term "wage." It has
been repeatedly declared by the courts that where the law speaks in clear and categorical language, there
is no room for interpretation or construction; there is only room for application (Cebu Portland Cement
Co. v. Municipality of Naga, G.R. Nos. 24116-17, August 22, 1968, 24 SCRA 708; Gonzaga v. Court of
Appeals, G.R. No. L-27455, June 28, 1973, 51 SCRA 381). A plain and unambiguous statute speaks for
itself, and any attempt to make it clearer is vain labor and tends only to obscurity. However, it may be
argued that if We correlate Article 97(f) with Article XIV of the Collective Bargaining Agreement,
Article 284 of the Labor Code and Sections 9(b) and 10 of the Implementing Rules, there appears to be an
ambiguity. In this regard, the Labor Arbiter rationalized his decision in this manner (pp. 74-76, Rollo):
rob1es virtual 1aw library

The definition of wage provided in Article 96 (sic) of the Code can be correctly be (sic) stated as a
general definition. It is wage in its generic sense. A careful perusal of the same does not show any
indication that commission is part of salary. We can say that commission by itself may be considered a
wage. This is not something novel for it cannot be gain said that certain types of employees like agents,
field personnel and salesmen do not earn any regular daily, weekly or monthly salaries, but rely mainly on
commission earned..com:cralaw:red

"Upon the other hand, the provisions of Section 10, Rule I, Book VI of the implementing rules in
conjunction with Articles 273 and 274 (sic) of the Code specifically states that the basis of the termination
pay due to one who is sought to be legally separated from the service is his latest salary rates.

x x x

"Even Articles 273 and 274 (sic) invariably use monthly pay or monthly salary.

"The above terms found in those Articles and the particular Rules were intentionally used to express the
intent of the framers of the law that for purposes of separation pay they mean to be specifically referring
to salary only.

". . . . Each particular benefit provided in the Code and other Decrees on Labor has its own pecularities
and nuances and should be interpreted in that light. Thus, for a specific provision, a specific meaning is
attached to simplify matters that may arise therefrom. The general guidelines in (sic) the formation of
specific rules for particular purpose. Thus, that what should be controlling in matters concerning
termination pay should be the specific provisions of both Book VI of the Code and the Rules. At any rate,
settled is the rule that in matters of conflict between the general provision of law and that of a particular
or specific provision, the latter should prevail."cralaw virtua1aw library
On its part, the NLRC ruled (p. 110, Rollo):jgc:.com.ph

"From the aforequoted provisions of the law and the implementing rules, it could be deduced that wage is
used in its generic sense and obviously refers to the basic wage rate to be ascertained on a time, task,
piece or commission basis or other method of calculating the same. It does not, however, mean that
commission, allowances or analogous income necessarily forms part of the employees salary because to
do so would lead to anomaleas (sic), if not absurd, construction of the word "salary." For what will
prevent the employee from insisting that emergency living allowance, 13th month pay, overtime and
premium pay, and other fringe benefits should be added to the computation of their separation pay. This
situation, to our mind, is not the real intent of the Code and its rules."cralaw virtua1aw library

We rule otherwise. The ambiguity between Article 97(f), which defines the term wage and Article XIV
of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the
Implementing Rules, which mention the terms "pay" and "salary", is more apparent than real. Broadly, the
word "salary" means a recompense or consideration made to a person for his pains or industry in another
mans business. Whether it be derived from "salarium," or more fancifully from "sal," the pay of the
Roman soldier, it carries with it the fundamental idea of compensation for services rendered. Indeed, there
is eminent authority for holding that the words "wages" and "salary" are in essence synonymous (Words
and Phrases, Vol. 38 Permanent Edition, p. 44 citing Hopkins v. Cromwell, 85 N.Y.S. 839, 841, 89 App.
Div. 481; 38 Am. Jur. 496). "Salary," the etymology of which is the Latin word "salarium," is often used
interchangeably with "wage", the etymology of which is the Middle English word "wagen." Both words
generally refer to one and the same meaning, that is, a reward or recompense for services performed.
Likewise, "pay" is the synonym of "wages" and "salary" (Blacks Law Dictionary, 5th Ed.). Inasmuch as
the words "wages", "pay" and "salary" have the same meaning, and commission is included in the
definition of "wage", the logical conclusion, therefore, is, in the computation of the separation pay of
petitioners, their salary base should include also their earned sales commissions..com:cralaw:red

The aforequoted provisions are not the only consideration for deciding the petition in favor of the
petitioners.

We agree with the Solicitor General that granting, in gratia argumenti, that the commissions were in the
form of incentives or encouragement, so that the petitioners would be inspired to put a little more industry
on the jobs particularly assigned to them, still these commissions are direct remunerations for services
rendered which contributed to the increase of income of Zuellig. Commission is the recompense,
compensation or reward of an agent, salesman, executor, trustees, receiver, factor, broker or bailee, when
the same is calculated as a percentage on the amount of his transactions or on the profit to the principal
(Blacks Law Dictionary, 5th Ed., citing Weiner v. Swales, 217 Md. 123, 141 A.2d 749, 750). The nature
of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate
clearly that commissions are part of petitioners wage or salary. We take judicial notice of the fact that
some salesmen do not receive any basic salary but depend on commissions and allowances or
commissions alone, although an employer-employee relationship exists. Bearing in mind the preceding
discussions, if We adopt the opposite view that commissions do not form part of wage or salary, then, in
effect, We will be saying that this kind of salesmen do not receive any salary and therefore, not entitled to
separation pay in the event of discharge from employment. Will this not be absurd? This narrow
interpretation is not in accord with the liberal spirit of our labor laws and considering the purpose of
separation pay which is, to alleviate the difficulties which confront a dismissed employee thrown to the
streets to face the harsh necessities of life.cralawnad

Additionally, in Soriano v. NLRC, Et Al., supra, in resolving the issue of the salary base that should be
used in computing the separation pay, We held that:red:.com.ph
"The commissions also claimed by petitioner (override commission plus net deposit incentive) are not
properly includible in such base figure since such commissions must be earned by actual market
transactions attributable to petitioner."cralaw virtua1aw library

Applying this by analogy, since the commissions in the present case were earned by actual market
transactions attributable to petitioners, these should be included in their separation pay. In the
computation thereof, what should be taken into account is the average commissions earned during their
last year of employment.

The final consideration is, in carrying out and interpreting the Labor Codes provisions and its
implementing regulations, the workingmans welfare should be the primordial and paramount
consideration. This kind of interpretation gives meaning and substance to the liberal and compassionate
spirit of the law as provided for in Article 4 of the Labor Code which states that "all doubts in the
implementation and interpretation of the provisions of the Labor Code including its implementing rules
and regulations shall be resolved in favor of labor" (Abella v. NLRC, G.R. No. 71812, July 30, 1987, 152
SCRA 140; Manila Electric Company v. NLRC, Et Al., G.R. No. 78763, July 12, 1989), and Article 1702
of the Civil Code which provides that "in case of doubt, all labor legislation and all labor contracts shall
be construed in favor of the safety and decent living for the laborer. law library

ACCORDINGLY, the petition is hereby GRANTED. The decision of the respondent National Labor
Relations Commission is MODIFIED by including allowances and commissions in the separation pay of
petitioners Jose Songco and Amancio Manuel. The case is remanded to the Labor Arbiter for the proper
computation of said separation pay.

SO ORDERED.

Narvasa (Chairman), Cruz, Gancayco and Grio-Aquino, JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 81077 June 6, 1990

LUIS DE OCAMPO, JR., JOSE RODRIGO, EUGENIO ESQUEJO, VICTORINO TABERNERO,

RIZALO DALIVA, FRANCISCO ACOSTA and 87 others listed in Annex 'A' hereof, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MAKATI DEVELOPMENT
CORPORATION, respondents.

Alfra Beta A. Serquina for petitioners.

Maximo P. Amurao, Jr. for private respondent.

CRUZ, J.:

The petition seeks a reversal of the decision of the respondent NLRC dated June 8, 1984, the dispositive
portion of which reads as follows:

WHEREFORE, the Decision appealed from is hereby MODIFIED as hereinabove

indicated. Consequently, the application for clearance to dismiss the union officers is
granted; the employment status of the individual complainants who were project
employees is also considered severed, not on account of illegality of the strike but due to
the expiration of their employment contracts; and the respondent is ordered to reinstate,
without back wages, the individual complainants who were regular employees except
those who were officers of the union among them or paid separation pay at their option,
equivalent to one month's pay or one-half month's pay for every year of service,
whichever is greater.

It appears that on September 30, 1980, the services of 65 employees of private respondent Makati
Development Corporation were terminated on the ground of the expiration of their contracts; that the said
employees filed a complaint for illegal dismissal against the MDC on October 1, 1980; * that on October
8, 1980, as a result of the aforementioned termination, the Philippine Transport and General Workers
Association, of which the complainants were members, filed a notice of strike on the grounds of union-
busting, subcontracting of projects which could have been assigned to the dismissed employees, and
unfair labor practice; that on October 14, 1980, the PTGWA declared a strike and established picket lines
in the perimeter of the MDC premises; that on November 4, 1980, the MDC filed with the Bureau of
Labor Relations a motion to declare the strike illegal and restrain the workers from continuing the strike;
that on that same day and several days thereafter the MDC filed applications for clearance to terminate
the employment of 90 of the striking workers, whom it had meanwhile preventively suspended; that of the
said workers, 74 were project employees under contract with the MDC with fixed terms of employment;
and that on August 31, 1982, Labor Arbiter Apolinar L. Sevilla rendered a decision 1denying the
applications for clearance filed by the MDC and directing it to reinstate the individual complainants with
two months back wages each.
This is the decision modified by the NLRC 2 which is now faulted by the petitioners for grave abuse of
discretion. The contention is that the public respondent acted arbitrarily and erroneously in ruling that: a)
the motion for reconsideration was filed out of time; b) the strike was illegal; and c) the separation of the
project employees was justified.

Having considered the issues and the arguments of the parties in their respective pleadings, including the
petitioners' ex parte motion for early resolution of this case, the Court makes the findings that follow.

On the first issue, we note that the rule on motions for reconsideration of the decision of the NLRC is now
found in Rule X of the Revised Rules of the NLRC, providing thus:

Section 9. Motions for reconsideration Motions for reconsideration of any order,

resolution or decision of the Commission shall not be entertained except when based on
palpable or patent errors, provided that the motion is under oath and filed within ten (I 0)
calendar days from receipt of the order, resolution or decision, with proof of service that
a copy of the same has been furnished, within the aforesaid reglementary period, the
adverse party and provided further, that only one such motion shall be entertained.

Subject to the provisions of Section 3, Rule IX of these Rules, motions for

reconsideration of an order, resolution or decision of a Division shall be resolved by the
Division of origin.

However, this section was promulgated only on November 5, 1986, and became effective only on
November 29, 1986, after the required publication. 3 It was therefore not yet in force when the required
resolution in the present case was rendered in 1984.

Apparently agreeing that the reglementary period then was fifteen days, the Solicitor General argues that
the petitioner's motion for reconsideration was nevertheless filed late on June 26, 1984, the decision of the
NLRC having been rendered on June 7, 1984, or 19 days earlier. 4 This is not exactly accurate. The fact is
Annex "C" of the petition shows that a copy of the decision was received by the petitioner only on June
13, 1984, and it was from that date that the reglementary period commenced to run. This means that the
motion for reconsideration was filed on time, only 13 days having elapsed before the deadline.

But this notwithstanding, we must hold that under the law then in force, to wit, PD No. 823 as amended
by PD No. 849, the strike was indeed illegal. In the first place, it was based not on the ground of
unresolved economic issues, which was the only ground allowed at that time, when the policy was indeed
to limit and discourage strikes. Secondly, the strike was declared only after 6 days from the notice of
strike and before the lapse of the 30-day period prescribed in the said law for a cooling-off of the
differences between the workers and management and a possible avoidance of the intended strike. That
law clearly provided:

Sec. 1. It is the policy of the state to encourage free trade unionism and free collective
bargaining within the framework of compulsory and voluntary arbitration. Therefore all
forms of strikes, picketing and lockout are hereby strictly prohibited in vital industries
such as in public utilities, including transportation and communication, companies
engaged in the manufacturer processing as well as in the distribution of fuel gas, gasoline
and fuel or lubricating oil, in companies engaged in the production or processing of
essential commodities or products for export, and in companies engaged in banking of
any kind, as well as in hospitals and in schools and colleges.
 However, any legitimate labor union may strike and any employer may lockout in
establishments not covered by General Order No. 5 only on grounds of unresolved
economic issues in collective bargaining, in which case the union or the employer shall
file a notice with the Bureau of Labor Relations at least 30 days before the intended strike
or lockout. (Emphasis supplied)

It is our ruling that the leaders of the illegal strike were correctly punished with dismissal, but their
followers (other than the contract workers) were properly ordered reinstated, considering their lesser
degree of responsibility. The penalty imposed upon the leaders was only proper because it was they who
instigated the strike even if they knew, or should have known, that it was illegal. It was also fair to rule
that the reinstated strikers were not entitled to backpay as they certainly should not be compensated for
services not rendered during the illegal strike. In our view, this is a reasonable compromise between the
demands of the workers and the rights of the employer.

Coming now to the last question, we stress the rule in Cartagenas v. Romago Electric Co., 5 that contract
workers are not considered regular employees, their services being needed only when there are projects to
be undertaken. 'The rationale of this rule is that if a project has already been completed, it would be unjust
to require the employer to maintain them in the payroll while they are doing absolutely nothing except
waiting until another project is begun, if at all. In effect, these stand-by workers would be enjoying the
status of privileged retainers, collecting payment for work not done, to be disbursed by the employer from
profits not earned. This is not fair by any standard and can only lead to a coddling of labor at the expense
of management.

We believe, however, that this rule is not applicable in the case at bar, and for - good reason. The record
shows that although the contracts of the project workers had indeed expired, the project itself was still on-
going and so continued to require the workers' services for its completion. 6 There is no showing that such
services were unsatisfactory to justify their termination. This is not even alleged by the private
respondent. One can therefore only wonder why, in view of these circumstances, the contract workers
were not retained to finish the project they had begun and were still working on. This had been done in
past projects. This arrangement had consistently been followed before, which accounts for the long years
of service many of the workers had with the MDC.

It is obvious that the real reason for the termination of their services-which, to repeat, were still needed-
was the complaint the project workers had filed and their participation in the strike against the private
respondent. These were the acts that rendered them persona non grata to the management. Their services
were discontinued by the MDC not because of the expiration of their contracts, which had not prevented
their retention or rehiring before as long as the project they were working on had not yet been completed.
The real purpose of the MDC was to retaliate against the workers, to punish them for their defiance by
replacing them with more tractable employees.

Also noteworthy in this connection is Policy Instruction No. 20 of the Department of Labor, providing
that "project employees are not entitled to separation pay if they are terminated as a result of the
completion of the project or any phase thereof in which they are employed, regardless of the projects in
which they had been employed by a particular construction company." 7 Affirmatively put, and
interpreting it in the most liberal way to favor the working class, the rule would entitle project employees
to separation pay if the projects they are working on have not yet been completed when their services are
terminated. And this should be true even if their contracts have expired, on the theory that such contracts
would have been renewed anyway because their services were still needed.
Applying this rule, we hold that the project workers in the case at bar, who were separated even before the
completion of the project at the New Alabang Village and not really for the reason that their contracts had
expired, are entitled to separation pay. We make this disposition instead of ordering their reinstatement as
it may be assumed that the said project has been completed by this time. Considering the workers to have
been separated without valid cause, we shall compute their separation pay at the rate of one month for
every year of service of each dismissed employee, up to the time of the completion of the project. 8 We
feel this is the most equitable way to treat their claim in light of their cavalier dismissal by the private
respondent despite their long period of satisfactory service with it.

It is the policy of the Constitution to afford protection to labor in recognition of its role in the
improvement of our welfare and the strengthening of our democracy. An exploited working class is a
discontented working class. It is a treadmill to progress and a threat to freedom. Knowing this, we must
exert all effort to dignify the lot of the employee, elevating him to the same plane as his employer, that
they may better work together as equal partners in the quest for a better life. This is a symbiotic
relationship we must maintain if such a quest is to succeed.

WHEREFORE, the appealed decision of the NLRC is AFFIRMED but with the modification that the
contract workers are hereby declared to have been illegally separated before the expiration of the project
they were working on and so are entitled to separation pay equivalent to one month salary for every year
of service. No costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 76633 October 18, 1988

EASTERN SHIPPING LINES, INC., petitioner,

vs.
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), MINISTER OF
LABOR AND EMPLOYMENT, HEARING OFFICER ABDUL BASAR and KATHLEEN D.
SACO, respondents.

Jimenea, Dala & Zaragoza Law Office for petitioner.

The Solicitor General for public respondent.

Dizon Law Office for respondent Kathleen D. Saco.

CRUZ, J.:

The private respondent in this case was awarded the sum of P192,000.00 by the Philippine Overseas
Employment Administration (POEA) for the death of her husband. The decision is challenged by the
petitioner on the principal ground that the POEA had no jurisdiction over the case as the husband was not
an overseas worker.

Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an accident in Tokyo,
Japan, March 15, 1985. His widow sued for damages under Executive Order No. 797 and Memorandum
Circular No. 2 of the POEA. The petitioner, as owner of the vessel, argued that the complaint was
cognizable not by the POEA but by the Social Security System and should have been filed against the
State Insurance Fund. The POEA nevertheless assumed jurisdiction and after considering the position
papers of the parties ruled in favor of the complainant. The award consisted of P180,000.00 as death
benefits and P12,000.00 for burial expenses.

The petitioner immediately came to this Court, prompting the Solicitor General to move for dismissal on
the ground of non-exhaustion of administrative remedies.

Ordinarily, the decisions of the POEA should first be appealed to the National Labor Relations
Commission, on the theory inter alia that the agency should be given an opportunity to correct the errors,
if any, of its subordinates. This case comes under one of the exceptions, however, as the questions the
petitioner is raising are essentially questions of law. 1 Moreover, the private respondent himself has not
objected to the petitioner's direct resort to this Court, observing that the usual procedure would delay the
disposition of the case to her prejudice.

The Philippine Overseas Employment Administration was created under Executive Order No. 797,
promulgated on May 1, 1982, to promote and monitor the overseas employment of Filipinos and to
protect their rights. It replaced the National Seamen Board created earlier under Article 20 of the Labor
Code in 1974. Under Section 4(a) of the said executive order, the POEA is vested with "original and
exclusive jurisdiction over all cases, including money claims, involving employee-employer relations
arising out of or by virtue of any law or contract involving Filipino contract workers, including seamen."
These cases, according to the 1985 Rules and Regulations on Overseas Employment issued by the POEA,
include "claims for death, disability and other benefits" arising out of such employment. 2

The petitioner does not contend that Saco was not its employee or that the claim of his widow is not
compensable. What it does urge is that he was not an overseas worker but a 'domestic employee and
consequently his widow's claim should have been filed with Social Security System, subject to appeal to
the Employees Compensation Commission.

We see no reason to disturb the factual finding of the POEA that Vitaliano Saco was an overseas
employee of the petitioner at the time he met with the fatal accident in Japan in 1985.

Under the 1985 Rules and Regulations on Overseas Employment, overseas employment is defined as
"employment of a worker outside the Philippines, including employment on board vessels plying
international waters, covered by a valid contract. 3 A contract worker is described as "any person working
or who has worked overseas under a valid employment contract and shall include seamen" 4 or "any
person working overseas or who has been employed by another which may be a local employer, foreign
employer, principal or partner under a valid employment contract and shall include seamen." 5 These
definitions clearly apply to Vitaliano Saco for it is not disputed that he died while under a contract of
employment with the petitioner and alongside the petitioner's vessel, the M/V Eastern Polaris, while
berthed in a foreign country. 6

It is worth observing that the petitioner performed at least two acts which constitute implied or tacit
recognition of the nature of Saco's employment at the time of his death in 1985. The first is its submission
of its shipping articles to the POEA for processing, formalization and approval in the exercise of its
regulatory power over overseas employment under Executive Order NO. 797. 7 The second is its
payment 8 of the contributions mandated by law and regulations to the Welfare Fund for Overseas
Workers, which was created by P.D. No. 1694 "for the purpose of providing social and welfare services to
Filipino overseas workers."

Significantly, the office administering this fund, in the receipt it prepared for the private respondent's
signature, described the subject of the burial benefits as "overseas contract worker Vitaliano
Saco." 9 While this receipt is certainly not controlling, it does indicate, in the light of the petitioner's own
previous acts, that the petitioner and the Fund to which it had made contributions considered Saco to be
an overseas employee.

The petitioner argues that the deceased employee should be likened to the employees of the Philippine Air
Lines who, although working abroad in its international flights, are not considered overseas workers. If
this be so, the petitioner should not have found it necessary to submit its shipping articles to the POEA for
processing, formalization and approval or to contribute to the Welfare Fund which is available only to
overseas workers. Moreover, the analogy is hardly appropriate as the employees of the PAL cannot under
the definitions given be considered seamen nor are their appointments coursed through the POEA.

The award of P180,000.00 for death benefits and P12,000.00 for burial expenses was made by the POEA
pursuant to its Memorandum Circular No. 2, which became effective on February 1, 1984. This circular
prescribed a standard contract to be adopted by both foreign and domestic shipping companies in the
hiring of Filipino seamen for overseas employment. A similar contract had earlier been required by the
National Seamen Board and had been sustained in a number of cases by this Court. 10 The petitioner
claims that it had never entered into such a contract with the deceased Saco, but that is hardly a serious
argument. In the first place, it should have done so as required by the circular, which specifically declared
that "all parties to the employment of any Filipino seamen on board any ocean-going vessel are advised to
adopt and use this employment contract effective 01 February 1984 and to desist from using any other
format of employment contract effective that date." In the second place, even if it had not done so, the
provisions of the said circular are nevertheless deemed written into the contract with Saco as a postulate
of the police power of the State. 11

But the petitioner questions the validity of Memorandum Circular No. 2 itself as violative of the principle
of non-delegation of legislative power. It contends that no authority had been given the POEA to
promulgate the said regulation; and even with such authorization, the regulation represents an exercise of
legislative discretion which, under the principle, is not subject to delegation.

The authority to issue the said regulation is clearly provided in Section 4(a) of Executive Order No. 797,
reading as follows:

... The governing Board of the Administration (POEA), as hereunder provided shall
promulgate the necessary rules and regulations to govern the exercise of the adjudicatory
functions of the Administration (POEA).

Similar authorization had been granted the National Seamen Board, which, as earlier observed, had itself
prescribed a standard shipping contract substantially the same as the format adopted by the POEA.

The second challenge is more serious as it is true that legislative discretion as to the substantive contents
of the law cannot be delegated. What can be delegated is the discretion to determine how the law may be
enforced, not what the law shall be. The ascertainment of the latter subject is a prerogative of the
legislature. This prerogative cannot be abdicated or surrendered by the legislature to the delegate. Thus, in
Ynot v. Intermediate Apellate Court 12 which annulled Executive Order No. 626, this Court held:

We also mark, on top of all this, the questionable manner of the disposition of the
confiscated property as prescribed in the questioned executive order. It is there authorized
that the seized property shall be distributed to charitable institutions and other similar
institutions as the Chairman of the National Meat Inspection Commission may see fit, in
the case of carabaos.' (Italics supplied.) The phrase "may see fit" is an extremely generous
and dangerous condition, if condition it is. It is laden with perilous opportunities for
partiality and abuse, and even corruption. One searches in vain for the usual standard and
the reasonable guidelines, or better still, the limitations that the officers must observe
when they make their distribution. There is none. Their options are apparently boundless.
Who shall be the fortunate beneficiaries of their generosity and by what criteria shall they
be chosen? Only the officers named can supply the answer, they and they alone may
choose the grantee as they see fit, and in their own exclusive discretion. Definitely, there
is here a 'roving commission a wide and sweeping authority that is not canalized within
banks that keep it from overflowing,' in short a clearly profligate and therefore invalid
delegation of legislative powers.

There are two accepted tests to determine whether or not there is a valid delegation of legislative
power, viz, the completeness test and the sufficient standard test. Under the first test, the law must be
complete in all its terms and conditions when it leaves the legislature such that when it reaches the
delegate the only thing he will have to do is enforce it. 13 Under the sufficient standard test, there must be
adequate guidelines or stations in the law to map out the boundaries of the delegate's authority and
prevent the delegation from running riot. 14

Both tests are intended to prevent a total transference of legislative authority to the delegate, who is not
allowed to step into the shoes of the legislature and exercise a power essentially legislative.

The principle of non-delegation of powers is applicable to all the three major powers of the Government
but is especially important in the case of the legislative power because of the many instances when its
delegation is permitted. The occasions are rare when executive or judicial powers have to be delegated by
the authorities to which they legally certain. In the case of the legislative power, however, such occasions
have become more and more frequent, if not necessary. This had led to the observation that the delegation
of legislative power has become the rule and its non-delegation the exception.

The reason is the increasing complexity of the task of government and the growing inability of the
legislature to cope directly with the myriad problems demanding its attention. The growth of society has
ramified its activities and created peculiar and sophisticated problems that the legislature cannot be
expected reasonably to comprehend. Specialization even in legislation has become necessary. To many of
the problems attendant upon present-day undertakings, the legislature may not have the competence to
provide the required direct and efficacious, not to say, specific solutions. These solutions may, however,
be expected from its delegates, who are supposed to be experts in the particular fields assigned to them.

The reasons given above for the delegation of legislative powers in general are particularly applicable to
administrative bodies. With the proliferation of specialized activities and their attendant peculiar
problems, the national legislature has found it more and more necessary to entrust to administrative
agencies the authority to issue rules to carry out the general provisions of the statute. This is called the
"power of subordinate legislation."

With this power, administrative bodies may implement the broad policies laid down in a statute by "filling
in' the details which the Congress may not have the opportunity or competence to provide. This is
effected by their promulgation of what are known as supplementary regulations, such as the implementing
rules issued by the Department of Labor on the new Labor Code. These regulations have the force and
effect of law.

Memorandum Circular No. 2 is one such administrative regulation. The model contract prescribed
thereby has been applied in a significant number of the cases without challenge by the employer. The
power of the POEA (and before it the National Seamen Board) in requiring the model contract is not
unlimited as there is a sufficient standard guiding the delegate in the exercise of the said authority. That
standard is discoverable in the executive order itself which, in creating the Philippine Overseas
Employment Administration, mandated it to protect the rights of overseas Filipino workers to "fair and
equitable employment practices."

Parenthetically, it is recalled that this Court has accepted as sufficient standards "Public interest"
in People v. Rosenthal 15 "justice and equity" in Antamok Gold Fields v. CIR 16 "public convenience and
welfare" in Calalang v. Williams 17 and "simplicity, economy and efficiency" in Cervantes v. Auditor
General, 18 to mention only a few cases. In the United States, the "sense and experience of men" was
accepted in Mutual Film Corp. v. Industrial Commission, 19 and "national security" in Hirabayashi v.
United States. 20

It is not denied that the private respondent has been receiving a monthly death benefit pension of P514.42
since March 1985 and that she was also paid a P1,000.00 funeral benefit by the Social Security System. In
addition, as already observed, she also received a P5,000.00 burial gratuity from the Welfare Fund for
Overseas Workers. These payments will not preclude allowance of the private respondent's claim against
the petitioner because it is specifically reserved in the standard contract of employment for Filipino
seamen under Memorandum Circular No. 2, Series of 1984, that

Section C. Compensation and Benefits.

1. In case of death of the seamen during the term of his Contract, the employer shall pay
his beneficiaries the amount of:

a. P220,000.00 for master and chief engineers

b. P180,000.00 for other officers, including radio operators and master

electrician

c. P 130,000.00 for ratings.

2. It is understood and agreed that the benefits mentioned above shall be separate and
distinct from, and will be in addition to whatever benefits which the seaman is entitled to
under Philippine laws. ...

3. ...

c. If the remains of the seaman is buried in the Philippines, the owners

shall pay the beneficiaries of the seaman an amount not exceeding
P18,000.00 for burial expenses.

The underscored portion is merely a reiteration of Memorandum Circular No. 22, issued by the National
Seamen Board on July 12,1976, providing an follows:

Income Benefits under this Rule Shall be Considered Additional Benefits.

All compensation benefits under Title II, Book Four of the Labor Code of the Philippines
(Employees Compensation and State Insurance Fund) shall be granted, in addition to
whatever benefits, gratuities or allowances that the seaman or his beneficiaries may be
entitled to under the employment contract approved by the NSB. If applicable, all
benefits under the Social Security Law and the Philippine Medicare Law shall be enjoyed
by the seaman or his beneficiaries in accordance with such laws.

The above provisions are manifestations of the concern of the State for the working class, consistently
with the social justice policy and the specific provisions in the Constitution for the protection of the
working class and the promotion of its interest.

One last challenge of the petitioner must be dealt with to close t case. Its argument that it has been denied
due process because the same POEA that issued Memorandum Circular No. 2 has also sustained and
applied it is an uninformed criticism of administrative law itself. Administrative agencies are vested with
two basic powers, the quasi-legislative and the quasi-judicial. The first enables them to promulgate
implementing rules and regulations, and the second enables them to interpret and apply such regulations.
Examples abound: the Bureau of Internal Revenue adjudicates on its own revenue regulations, the Central
Bank on its own circulars, the Securities and Exchange Commission on its own rules, as so too do the
Philippine Patent Office and the Videogram Regulatory Board and the Civil Aeronautics Administration
and the Department of Natural Resources and so on ad infinitum on their respective administrative
regulations. Such an arrangement has been accepted as a fact of life of modern governments and cannot
be considered violative of due process as long as the cardinal rights laid down by Justice Laurel in the
landmark case of Ang Tibay v. Court of Industrial Relations 21 are observed.

Whatever doubts may still remain regarding the rights of the parties in this case are resolved in favor of
the private respondent, in line with the express mandate of the Labor Code and the principle that those
with less in life should have more in law.

When the conflicting interests of labor and capital are weighed on the scales of social justice, the heavier
influence of the latter must be counter-balanced by the sympathy and compassion the law must accord the
underprivileged worker. This is only fair if he is to be given the opportunity and the right to assert and
defend his cause not as a subordinate but as a peer of management, with which he can negotiate on even
plane. Labor is not a mere employee of capital but its active and equal partner.

WHEREFORE, the petition is DISMISSED, with costs against the petitioner. The temporary restraining
order dated December 10, 1986 is hereby LIFTED. It is so ordered.

Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-21849 December 11, 1967

LOURDES VDA. DE MAGALONA, petitioner,

vs.
THE WORKMEN'S COMPENSATION COMMISSION and THE NATIONAL SHIPYARD AND
STEEL CORPORATION (NASSCO), respondents.

Pablo B. Badong and Associates for petitioner.

P. C. Villavieja and P. E. Villanueva for respondent WCC.
Eduardo S. Rodriguez for respondent NASSCO.

BENGZON, J.P., J.:

Since April 1, 1954, Jorge Magalona worked for NASSCO-Iligan Steel Mills, as batteryman, then as
electrician-helper and finally as pulpit operator with a weekly salary of P26.40, with hours of work at
7:00 A.M.-12: 00 Noon, 1:00 P.M.-4:00 P.M. As a batteryman, he filled jars of dry cells with
hydrochloric acid inside a room that was always damp because of the sprinkling of water over the dry
cells to prevent the acid from flowing. As electrician-helper, he helped clean electric motors, rewound
coils and did other work in the electric shop. In his last designation as pulpit operator, he worked in the
rolling mill department, which was hot, operated an electric switch and caught steel bars passing through
at a finish line.

On February 16, 1956, Magalona went on sick leave, to last up to March 10, 1956. He was not able to
report for work after his leave expired. On May 1, 1956, he was admitted in Riverside Hospital, Bacolod
City, where he died on May 17, of that year, of duodenal ulcer with partial obstruction at the pyloric end
of the stomach, severe anemia with kidney complications.

On July 25, 1956, his widow, Lourdes Magalona, filed a claim for compensation under the Workmen's
Compensation Act. Respondent company did not controvert the claim. The hearing officer of the
Regional Office, Department of Labor, awarded the widow and her child P2,745.60 as death benefits,
P200.00 as burial expenses, P1,645.60 as medical expenses and P135.28 as attorney's fees. The award
was based on the ground that the conditions of work inhalation of gas fumes, incessant heat, irregular
eating habits might have caused duodenal ulcer, in line with the principle of liberal construction of
labor laws in favor of the laborer.

On review before the Workmen's Compensation Commission in Manila, claimant's counsel filed a
"Motion to Dismiss the Appeal or Reply to Petition for Review", alleging, as it did before the hearing
officer, that the case should be dismissed because NASSCO had not filed any written notice of
controversion of the claim. Since medical considerations were involved, Workmen's Compensation
Commissioner Cesareo Perez referred the case to the Evaluation Division of the Bureau of Workmen's
Compensation for a medical opinion. Dr. Elda M. Montemayor, Senior Compensation Rating Medical
Officer therein, in her report dated February 20, 1963 (approved by the Chief of the Evaluation Division),
stated that although the exact cause of duodenal ulcer is still unknown, the conditions of his work, in the
absence of sufficient proof that the deceased missed or had irregular meals, had no causal relationship
with the ailment causing his death. Without resolving the motion to dismiss, Commissioner Perez
reversed the decision of the hearing officer, absolved NASSCO and ruled that duodenal ulcer is not
compensable without any showing that there was any causal connection between the ulcer and the nature
of the work, such as aggravation of the illness through an accident, over exertion and the like.

After the Commission en banc denied her motion for reconsideration, claimant appealed to Us by way
of certiorari, raising the following questions for determination:

1. Could the NASSCO have legally petitioned for review of the decision of the hearing officer
considering that it had not controverted the claim?

2. Was the admission by Commissioner Perez of the medical opinion of a Senior Compensation Rating
Officer of the Commission proper?

3. Was there need for claimant to show causal connection between the death of the employee and the
nature of his work?

As the hearing officer found, NASSCO failed to controvert the claim. It is NASSCO's position that
granting there was no controversion, the acceptance by the hearing officer of NASSCO's evidence was
tantamount to reinstatement of its right to controvert, citing Section 4 of Rule 14 of the Rules of the
Workmen's Compensation Commission. However, to reinstate one's right to controvert, the section
requires a petition under oath by the employer, specifying the reason for its failure to controvert.itc-alf In
the case at bar, there was no such petition. Mere acceptance by the hearing officer of the evidence
presented did not mean the reinstatement of the right to controvert. The law itself provides that only the
Commissioner may reinstate the right to controvert. (See Sec. 45, par. 2, Workmen's Compensation Act;
Agustin v. WCC, L-19957, Sept. 29, 1964).lawphil.net By failing to present a written controversion of the
claim, the employer, NASSCO, renounced its right to challenge the claim. And this means that all non-
jurisdictional defenses, such as non-compensability of the illness, prescription, etc., are barred.1

Respondent NASSCO, in its answer before Us, alleges that the claim had prescribed, for it allegedly
received notice of the claim for compensation only on July 25, 1962 (p. 64 of the Record).itc-alf The
hearing officer, however, found that the records show the claim to have been received July 25, 1956
(Record, p. 33). Furthermore, it was the company physician who diagnosed the employee's illness (pp. 73
of T.s.n., quoted in petition, p. 22 of Record).The wife testified under oath that she sent a telegram to
NASSCO right after the death of her husband and later filed her claim with its manager. These matters
were not touched on by the reviewing commissioner or the Commission en banc and should stand. The
widow's acts after the death of her husband may be considered as substantial compliance with the
required notice of claim for compensation. In a case, We accepted as substantial compliance with Section
24 of the Act an oral demand for compensation hardly a month after lay-off, making of little consequence
a subsequent written claim filed much later.2 And besides, as stated, for lack of proper controversion, the
defense of prescription is likewise barred.

With regard to the admissibility of the medical opinion report of Dr. Montemayor, said report should not
have been admitted because while technical rules of procedure need not be followed by the
Commission,3 no evidence should be taken into account where the adverse party was not given the
opportunity to object to its admissibility.4 This is sound especially where on such admitted report was
principally based the decision of reversal.

Based on the medical report, the Workmen's Compensation Commissioner ruled that the claimant must
first establish a causal link between the nature of the employment and the cause of death of Magalona,
before claimant can be compensated. This is a reversible error. The employee had obviously been sick.
His inability to report sack to work when his sick leave expired did not sever the employer-employee
relationship. NASSCO never claimed that it had terminated his employment. NASSCO claimed that he
was "absent without leave" (pp. 36-38 of T.s.n., quoted in respondent's answer, pp. 68-69 of the
Record).lawphil.net It is now unquestionable that once the illness supervened at the time of the
employment there is a rebuttable presumption that such illness arose out of the employment or was at
least aggravated by such employment. The claimant is relieved from the burden of proving causation once
the illness or the injury is shown to have arisen in the course of employment.5 Thus, the precise medical
cause of the illness is not legally significant, as long as the illness supervened in the course of the
employment. The presumption of causation or aggravation then applies. The function of a presumption is
precisely to dispense with the need for proof. The burden to overthrow the presumption and to disconnect,
by substantial evidence, the injury or sickness from employment, is laid by the statute at the door of the
employer.6 In the case at bar no substantial evidence exists to overcome said presumption. And, even if
the medical report is considered, since the report itself admits that the real cause of duodenal ulcer is
unknown, the presumption established by law would still apply as against a mere opinion on the non-
causal connection between duodenal ulcer and the nature of Magalona's employment.lawphil.net

WHEREFORE, the appealed resolution of the Workmen's Compensation Commission en banc and the
Commissioner's decision are hereby reversed, and the award of the hearing officer granting claimant
P2,745.60 as death benefits; P200.00 as burial expenses; P1,645.60 as medical expenses; and P138.25 as
attorney's fees, is affirmed. No costs. So ordered.
 G.R. No. L-7636, June 27, 1955 ]

ASIA STEEL CORPORATION, PETITIONER, VS. WORKMEN'S COMPENSATION COMMISSION

AND ISMAEL CARBAJOSA, RESPONDENTS.

DECISION

BENGZON, J.:
Petition to review the order of the Workmen's Compensation Commission approving the award of its
referee in favor of the laborer Ismael Carbajosa, against his employer Asia Steel Corporation.
It appears that on April 16, 1951, while working in said Corporation's steel factory in Grace Park, Manila,
Carbajosa tapped the belt of a running machine to tighten it, but his hand was caught accidentally by the
belt, he stumbled down and his two feet were so seriously injured, they had to be amputated at the
Chinese General Hospital where he was rushed immediately after the mishap. Hospitalization were paid
by the corporation.
Thereafter Carbajosa claimed for compensation. The referee, having found that he was employed as
apprentice, and that the accident arose out of employment, required the Asia Steel Corporation to
indemnify in the total sum of two thousand two hundred forty six pesos and forty centavos (P2,246.40)
and to pay the costs.
The instant petition for review rests on two major propositions: (1) Ismael Carbajosa was not an employee
or laborer and (2) the accident was "occasioned by" his "own fault and negligence".
This second issue, however, was not tendered in the Corporation's motion to dismiss, Annex B, filed with
Workmen's Compensation Commission, and neither the referee nor the Commission made findings on
such question of negligence. Anyway it is no excuse for the employer: it merely reduces the
compensation. (Art. 1711 New Civil Code.) Nevertheless, on close examination the contention turn out to
be founded on the reasoning that being a stranger in the premises -not an employee- Carbajosa had no
right, and therefore was careless, to touch the machines of the factory. (p. 27 Record.)
Hence this revision may be limited to the simple question whether the petitioner had given employment to
Carbajosa.
According to the Commission,
"x x x the claimant, a native of Negros Occidental, came to Manila on March 31, 1951, to look for a job.
On April 5, 1951, he met an aquaintance, Pablo Sesia, whose aid sought in the matter of securing
employment. Sesia, who was employed in the Asia Steel Corporation as a mechanic, promised to take
Carbajosa to his employer.
Upon previous arrangement with Sesia, therefore, Carbajosa went to respondent's nail factory at Grace
Park, Caloocan, Rizal, on April 9, 1951. Sesia introduced the claimant to Mr. Kim, in charge of the
factory. During the interview, Kim told the claimant that he, (Kim) would take up the matter with the
manager, and Carbajosa would know the manager's decision as soon as he (the claimant) returned. The
next morning, the claimant came back to the factory and was told by Kim to begin working as an
apprentice. It was further agreed that claimant's wage would be determined upon the arrival of materials
which the manager ordered from Japan. The claimant assumed work on the same day, doing odd jobs
under the direction of Sesia.
It also appears that Kim lived in the factory. Pablo Sesia was also lodging in the factory and permission
was secured from Kim in order that the claimant might live in the factory with Sesia.
On April 16, 1951, hardly a week since the claimant began working in the factory, while he was
tightening the belt of one of the machines, his hand was caught by the running belt. The force of the
moving belt caused claimant to lose his balance. He was dragged to the other end of the machine. His feet
were smashed by the iron shaft and he was pinned under the machine itself."x x x

Under the laws we are bound to accept these findings; and must disregard petitioner's arguments disputing
them[1]. But this does not necessarily dispose of the matter, because ther remains the legal proposition
extensively discussed by counsel for petitioner that Kim's acts could not bind the corporation, since only
the President, Yu Kong Tiong, was authorized by its by-laws to hire employees for the manufacturing
establishment.
The Commission found that Yu Kong Tiong was the president of the corporation and Sy Te the manager;
but Yu Kong Tiong was permitted actually to manage its affairs, (it being a "family" corporation) by
remote control from his office in Manila thru Kim who was "in charge" of the factory in Caloocan. It also
declared that Kim was allowed by Yu Kong Tiong to employ Carbajosa as apprentice. (p. 52 Record.)
From such circumstances, the conclusion flows inevitably that Carbajosa was, at the time of the
occurence, an employee of the petitioning corporation.
Of course it is undeniable that as president and manager Yu Kong Tiong could legally employ, by
himself, manual laborers to work in the factory[2]. And there is nothing to prevent him from employing
Carbajosa, thru his agent Kim, as the latter did. In fact it may even be held that in default of proof
establishing Yu Kong Tiong's assent to the employment, inasmuch as Kim the person actually in charge
of the factory represented to Carbajosa that he was authorized by the manager to engage his (Carbajosa's)
services, there was apparent authority of Kim, sufficiently ample to create the relationship of employer
and employee for the purposes of the Workmen's Compensation Law.
"It may be stated as a general rule that anagent, who with authority express, implied, apparent or actual,
employs help for the benefit of his principal's business, therby creates the relationship of employer and
employee between such help and his principal." (Schneider, Workmen's Compensation (Permanent Ed.)
Vol. I p. 617, citing many cases.)
"It has been held: that where a driver, employed to solicit sales of beer and make delivery, was permitted
to employ helpers, a helper who was injured while in the performance of his duty was entitled to
compensation from brewery; that an expert, hired by a factory owner to supervise the installation of
machinery, who hired assistants, paid by the owner, one of such assistants being injured while so engaged
was entitled to compensation from the factory owner; that workmen hired by an agent of the company,
which took over the logging work of an independent contractor, became the employees of the company."
(Schneider, op. cit. p. 619.)

Needless to say, the existence of employer-employee relationship is the jurisdictional foundation without
which an indemnity is unauthorized. Schneider p. 569-570.) It is often difficult of determination, because
purposely made so by employers bent on evading liability under the Compensation Acts. Hence, if the
object of the law is to be accomplished with a liberal construction[3], the creation of the relationship
should not be adjudged strictly in accordance with technical legal rules, but rather according to the
actualities and realities of industrial or business practice. A laborer is told to work for the establishment
by the person-in-charge, who in turn represented he had consulted with the manager. If the by-laws of the
corporation had provided that no laborer may be hired unless with the written consent of the board of
directors, would it be consonant with justice to deny such laborer compensation for injuries, upon the
ground of lack of written authority? If so, a loophole has thereby been created in the Workmen's
Compensation Law. That is perhaps the reason why apparent authority has been considered enough, what
with the principles of estoppel lending persuasive support. (Schneider op. cit. Vol. I p. 623.)
A parallel situation arose in Flores et al. v. La Compaia Maritima, 32 O. Gaz. No. 21 pp. 406-407. The
heirs of Graciano Paninsoro demanded compensation because he died by reason of injuries received while
working on the ship "Albay" belonging to and operated by the Compaia Maritima, a corporation. The
facts were;
"About the last week of the month of October, 1929, the defendant's boat, Albay, dropped anchor in the
port of Cebu where the captain thereof, through a contractor or agent, recruited laborers who were to
board the ship for the purpose of unloading her cargo upon arrival at the next port of call, Davao, and
loading cargo for various ports of call on her return trip. Among those laborers was the appellant Eusebia
Flores' husband, Graciano Paninsoro, who was earning a daily wage of P1.50 including subsistence."

The defendant contended on appeal that Paninsoro was not its employee. This Court held,
"There is not a least shadow of a doubt that the deceased was a laborer in the legal sense. He had been
recruited by order of the captain of the ship and he was engage in a task of unloading the ship's cargo at
the time of the accident. There can be no dispute that this kind of work is included in the business in
which the appellee is engaged. That the deceased had been recruited or engaged by a contractor is of no
moment because the latter, for purposes of the law, was in turn, represented the appellee." (Flores et al. v.
La Compaia Maritima, 32 O. Gaz. No. 21 pp. 406-407.)

It should be observed in the above litigation that neither the board of directors nor the President nor the
manager of the defendant corporation had hired the laborer Paninsoro. It was the captain of the ship, thru
an agent, that employed him. Now then, in this case as the person-in-charge of the factory (Kim) hired
Carbajosa, the contract of employment should be upheld.
There is further circumstance, implying ratification of the employment, that the acting manager of the
corporation Atty. Mercado directed the payment by the corporation of Carbajosa's hospital expenses,
amounting to P2,000.00. Mercado's explanation that he did it out of pity, was not, and could not be
accepted since the Asia Steel Corporation is not a charitable institution.
In view of the foregoing, and the petitioner not having questioned the amount of compensation, the order
of the Commission, should be , as it is hereby, affirmed with costs. So ordered.
Padilla, Montemayor, Reyes, Jugo, Bautista Angelo, Labrador, Concepcion, and Reyes, J.B.L., JJ.,
concur.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-16600 December 27, 1961

ILOILO CHINESE COMMERCIAL SCHOOL, petitioner,

vs.
LEONORA FABRIGAR and THE WORKMEN'S COMPENSATION
COMMISSION, respondents.

Luis G. Hofilea for petitioner.

J. T. de Leon for respondents.

PAREDES, J.:

As a result of the death of Santiago Fabrigar, on June 28, 1956, his heirs in the person of Leonora
Fabrigar (common-law wife) and their children, filed a claim for compensation with the Workmen's
Compensation Commission, Case No. 1085, W.C.C., entitled "Leonora Fabrigar, et al., Claimants, vs.
Iloilo Chinese Commercial School, Respondent." In this claim, it was alleged that the cause of death was
" pulmonary tuberculosis contracted during and as a result of his employment as janitor." The Hearing
Officer of the WCC denied the claim and dismissed the case, finding that the claimant failed to prove the
casual effect of employment and death; nothing was shown that the disease was contracted in line of duty;
that whatever evidence claimant presented about the cause of death was only a mere suggestion that
progressively developed from tuberculosis with heart trouble to a sudden fatal turn, ending up for the
cause of "beriberi adult" at the time of death, as per certification of Sanitary Inspector Dr. P. E. Labitoria,
of Dao, Capiz (Exhibits C & 4).

The heirs of Santiago Fabrigar appealed the decision with the Workmen's Compensation Commission
which, on November 12, 1959, rendered judgment reversing the decision of its Hearing Officer, making
the following findings of facts:

That Santiago Fabrigar had been employed from 1947 to March 12, 1956, as a janitor-messenger of the
respondent Iloilo Chinese Commercial School, his work consisting of sweeping and scrubbing the floors,
cleaning the classrooms and the school premises, and other janitorial chores; on March 11, 1956,
preparatory to graduation day, he carried desks and chairs from the classrooms to the auditorium, set the
curtains and worked harder and faster than usual; that although he felt shortness of breath and did not feel
very well that day, he continued working at the request of the overseer of respondent, that on the
following day he reported for work, but on March 13, he spat blood and stopped working; that from April
29, 1956 to May 15, 1956, he was under treatment by Dr. Quirico Villareal "for far advanced pulmonary
tuberculosis and for heart disease"; and that previous to said treatment, he was attended by Dr. Jaranilla
for pulmonary tuberculosis. The Commission concluded that the short period of intervention between his
last day of work (March 13, 1956) when he spat blood and his death on June 28, 1956, due to pulmonary
tuberculosis, indicated that he had been suffering from such disease even during the time he was
employed by the respondent and considering the strenuous work he performed, his employment as janitor
aggravated his pre-existing illness; that although here is a discrepancy between the cause of death
"beriberi adult," as appearing in the death Certificate and the testimony of Dr. Villareal, the latter
deserves more credence, because the information (cause of death) was given by the sanitary inspector
who did not, in any way, examine the deceased before or after his death. The Commission, therefore,
ordered the respondent Chinese Commercial School, Inc., in said case

1. To pay to the claimant, for and in behalf of her minor children by the deceased, namely,
Carlito, Gloria, Rosita and Ernesto, all surnamed Fabrigar, the amount of TWO THOUSAND
FOUR HUNDRED NINETY SIX and 00/00 Pesos (P2,496.00) as Death benefits; and

2. To pay to the Commission the amount of P25.00 as fees pursuant to Section 55 of Act 3428, as
amended.

The above decision is now before Us for Review on a Writ of Certiorari, after the motion for
reconsideration had been denied, petitioner alleging that the Commission erred:

1. In disregarding completely the evidentiary value of the death certificate of the attending
physician which was presented as evidence by both claimants and respondent (Exhibits C & 4) to
prove the cause of death;

2. In finding that the cause of death of said Santiago Fabrigar was tuberculosis and was
contracted during and as a result of the nature of his employment;

3. In holding that the herein petitioner was the employer of the deceased Santiago Fabrigar; and

4. In not holding that the herein petitioner is exempt from the scope of the Workmen's
Compensation Law.lawphil.net

Petitioner contends that the preponderance of evidence on the matters involved in this case, militates in its
favor. Considering the doctrine that the Commission, like the Court of Industrial Relations, is bound not
by the rule of preponderance of evidence as in ordinary civil cases, but by the rule of substantial evidence
(Ang Tibay vs. CIR, 69 Phil. 635; Phil. Newspaper Guild vs. Evening News, 47 Off. Gaz. No. 12, p.
6188; Secs. 43 & 46 Rep. Act No. 772, W.C. Act), petitioner's pretension is without merit. Substantial
evidence supports the decision of the Commission. While seemingly there exists an inconsistency in the
cause of death, as appearing in the death certificate by Dr. Labitoria and in Dr. Villareal's diagnosis, it is a
fact found by the Commission, that the Sanitary Inspector did not examine the deceased before and after
his death. "Undoubtedly," says the Commission, "the information that he died of beriberi adult, as
appearing in the death certificate was given because it appears that the deceased had also edema of the
extremities (swollen legs)." The evidence of record sustains the following findings of the Commission, is
Fabrigar's cause of death to wit

The short period of time intervening between his last day of work (March 13, 1956) when he spat
blood and his death June 28, 1956 due to pulmonary tuberculosis indicates that he had been
suffering from the disease even during the time that he was employed by the respondent.
Considering the strenuous work that he performed while in the service of the respondents and the
unusually long hours of work he rendered (6:00 p.m. to 1:30 p.m. and from 2:00 p.m. to 6:00 p.m.
or 7:00 p.m.) beyond the normal and legal working hours, we find that his employment aggravated
his pre-existing illness and brought about his death. Moreover, our conclusion finds support in the
fact that immediately preceding his last day of work with the respondent, he had an unusually
hard day lifting desks and other furnitures and assisting in the preparations for the graduation
exercises of the school. Considering also his complaints during that day (March 11), among
which was "shortness of breath", we may also say that his work affected an already existing heart
ailment.
We find no plausible reason for altering or disturbing the above factual findings of the Commission, in
the present appeal by certiorari.

It is claimed that actually the deceased was not an employee of the petitioner, but by the Iloilo Chinese
Chamber of Commerce which was the one that furnished the janitor service in the premises of its
buildings, including the part thereof occupied by the petitioner; that the Chamber of Commerce paid the
salaries of janitors, including the deceased; that the petitioner could not afford to pay rentals of its
premises and janitor due to limited finances depended largely on funds raised among its Board of
Directors, the Chinese Chamber of Commerce and Chinese nationals who helped the school. In other
words, it is pretended that the deceased was not an employee of the school but of the Chinese Chamber of
Commerce which should be the one responsible for the compensation of the deceased. On one hand,
according to the Commission, there is substantial proof to the effect that Fabrigar was employed by and
rendered service for the petitioner and was an employee within the purview of the Workmen's
Compensation Law. On the other hand, the most important test of employer-employee relation is the
power to control the employee's conduct. The records disclose that the person in charge (encargado) of
the respondent school supervised the deceased in his work and had control over the manner he performed
the same.

It is finally contended that petitioner is an institution devoted solely for learning and is not an industry
within the meaning of the Workmen's Compensation Law. Consequently, it is argued, it is exempt from
the scope of the same law. Considering that this factual question has not been properly put in issue before
the Commission, it may not now be entertained in this appeal for the first time (Atlantic Gulf, etc. vs.
CIR, et al., L-16992, Dec. 23, 1961, citing International Oil Factory Union v. Hon. Martinez, et al., L-
15560, Dec. 31, 1960). The decision of the Commission does not show that the matter was taken up. We
are at a loss to state whether the issue was raised in the motion for reconsideration filed with the
Commission, because the said motion is not found in the record before us. And the resolution to the
motion for reconsideration does not touch this question.

IN VIEW HEREOF, the appeal interposed by the petitioner is dismissed, and the decision appealed from
is affirmed, with costs against the herein petitioner.

Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Dizon and De Leon,
JJ., concur.
Padilla, J., took no part.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-41182-3 April 16, 1988

DR. CARLOS L. SEVILLA and LINA O. SEVILLA, petitioners-appellants,

vs.
THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC., ELISEO S.CANILAO, and
SEGUNDINA NOGUERA, respondents-appellees.

SARMIENTO , J.:

The petitioners invoke the provisions on human relations of the Civil Code in this appeal by certiorari.
The facts are beyond dispute:

xxx xxx xxx

On the strength of a contract (Exhibit A for the appellant Exhibit 2 for the appellees)
entered into on Oct. 19, 1960 by and between Mrs. Segundina Noguera, party of the first
part; the Tourist World Service, Inc., represented by Mr. Eliseo Canilao as party of the
second part, and hereinafter referred to as appellants, the Tourist World Service, Inc.
leased the premises belonging to the party of the first part at Mabini St., Manila for the
former-s use as a branch office. In the said contract the party of the third part held herself
solidarily liable with the party of the part for the prompt payment of the monthly rental
agreed on. When the branch office was opened, the same was run by the herein appellant
Una 0. Sevilla payable to Tourist World Service Inc. by any airline for any fare brought
in on the efforts of Mrs. Lina Sevilla, 4% was to go to Lina Sevilla and 3% was to be
withheld by the Tourist World Service, Inc.

On or about November 24, 1961 (Exhibit 16) the Tourist World Service, Inc. appears to
have been informed that Lina Sevilla was connected with a rival firm, the Philippine
Travel Bureau, and, since the branch office was anyhow losing, the Tourist World
Service considered closing down its office. This was firmed up by two resolutions of the
board of directors of Tourist World Service, Inc. dated Dec. 2, 1961 (Exhibits 12 and 13),
the first abolishing the office of the manager and vice-president of the Tourist World
Service, Inc., Ermita Branch, and the second,authorizing the corporate secretary to
receive the properties of the Tourist World Service then located at the said branch office.
It further appears that on Jan. 3, 1962, the contract with the appellees for the use of the
Branch Office premises was terminated and while the effectivity thereof was Jan. 31,
1962, the appellees no longer used it. As a matter of fact appellants used it since Nov.
1961. Because of this, and to comply with the mandate of the Tourist World Service, the
corporate secretary Gabino Canilao went over to the branch office, and, finding the
premises locked, and, being unable to contact Lina Sevilla, he padlocked the premises on
June 4, 1962 to protect the interests of the Tourist World Service. When neither the
appellant Lina Sevilla nor any of her employees could enter the locked premises, a
 complaint wall filed by the herein appellants against the appellees with a prayer for the
issuance of mandatory preliminary injunction. Both appellees answered with
counterclaims. For apparent lack of interest of the parties therein, the trial court ordered
the dismissal of the case without prejudice.

The appellee Segundina Noguera sought reconsideration of the order dismissing her
counterclaim which the court a quo, in an order dated June 8, 1963, granted permitting
her to present evidence in support of her counterclaim.

On June 17,1963, appellant Lina Sevilla refiled her case against the herein appellees and
after the issues were joined, the reinstated counterclaim of Segundina Noguera and the
new complaint of appellant Lina Sevilla were jointly heard following which the court a
quo ordered both cases dismiss for lack of merit, on the basis of which was elevated the
instant appeal on the following assignment of errors:

I. THE LOWER COURT ERRED EVEN IN APPRECIATING THE NATURE OF

PLAINTIFF-APPELLANT MRS. LINA O. SEVILLA'S COMPLAINT.

II. THE LOWER COURT ERRED IN HOLDING THAT APPELLANT MRS. LINA 0.
SEVILA'S ARRANGEMENT (WITH APPELLEE TOURIST WORLD SERVICE,
INC.) WAS ONE MERELY OF EMPLOYER-EMPLOYEE RELATION AND IN
FAILING TO HOLD THAT THE SAID ARRANGEMENT WAS ONE OF JOINT
BUSINESS VENTURE.

III. THE LOWER COURT ERRED IN RULING THAT PLAINTIFF-APPELLANT

MRS. LINA O. SEVILLA IS ESTOPPED FROM DENYING THAT SHE WAS A
MERE EMPLOYEE OF DEFENDANT-APPELLEE TOURIST WORLD SERVICE,
INC. EVEN AS AGAINST THE LATTER.

IV. THE LOWER COURT ERRED IN NOT HOLDING THAT APPELLEES HAD NO
RIGHT TO EVICT APPELLANT MRS. LINA O. SEVILLA FROM THE A. MABINI
OFFICE BY TAKING THE LAW INTO THEIR OWN HANDS.

V. THE LOWER COURT ERRED IN NOT CONSIDERING AT .ALL APPELLEE

NOGUERA'S RESPONSIBILITY FOR APPELLANT LINA O. SEVILLA'S
FORCIBLE DISPOSSESSION OF THE A. MABINI PREMISES.

VI. THE LOWER COURT ERRED IN FINDING THAT APPELLANT APPELLANT

MRS. LINA O. SEVILLA SIGNED MERELY AS GUARANTOR FOR RENTALS.

On the foregoing facts and in the light of the errors asigned the issues to be resolved are:

1. Whether the appellee Tourist World Service unilaterally disco the telephone line at the
branch office on Ermita;

2. Whether or not the padlocking of the office by the Tourist World Service was
actionable or not; and
3. Whether or not the lessee to the office premises belonging to the appellee Noguera was
appellees TWS or TWS and the appellant.

In this appeal, appealant Lina Sevilla claims that a joint bussiness venture was entered
into by and between her and appellee TWS with offices at the Ermita branch office and
that she was not an employee of the TWS to the end that her relationship with TWS was
one of a joint business venture appellant made declarations showing:

1. Appellant Mrs. Lina 0. Sevilla, a prominent figure and wife of an

eminent eye, ear and nose specialist as well as a imediately columnist
had been in the travel business prior to the establishment of the joint
business venture with appellee Tourist World Service, Inc. and appellee
Eliseo Canilao, her compadre, she being the godmother of one of his
children, with her own clientele, coming mostly from her own social
circle (pp. 3-6 tsn. February 16,1965).

2. Appellant Mrs. Sevilla was signatory to a lease agreement dated 19

October 1960 (Exh. 'A') covering the premises at A. Mabini St., she
expressly warranting and holding [sic] herself 'solidarily' liable with
appellee Tourist World Service, Inc. for the prompt payment of the
monthly rentals thereof to other appellee Mrs. Noguera (pp. 14-15, tsn.
Jan. 18,1964).

3. Appellant Mrs. Sevilla did not receive any salary from appellee
Tourist World Service, Inc., which had its own, separate office located at
the Trade & Commerce Building; nor was she an employee thereof,
having no participation in nor connection with said business at the Trade
& Commerce Building (pp. 16-18 tsn Id.).

4. Appellant Mrs. Sevilla earned commissions for her own passengers,

her own bookings her own business (and not for any of the business of
appellee Tourist World Service, Inc.) obtained from the airline
companies. She shared the 7% commissions given by the airline
companies giving appellee Tourist World Service, Lic. 3% thereof aid
retaining 4% for herself (pp. 18 tsn. Id.)

5. Appellant Mrs. Sevilla likewise shared in the expenses of maintaining

the A. Mabini St. office, paying for the salary of an office secretary, Miss
Obieta, and other sundry expenses, aside from desicion the office
furniture and supplying some of fice furnishings (pp. 15,18 tsn. April
6,1965), appellee Tourist World Service, Inc. shouldering the rental and
other expenses in consideration for the 3% split in the co procured by
appellant Mrs. Sevilla (p. 35 tsn Feb. 16,1965).

6. It was the understanding between them that appellant Mrs. Sevilla

would be given the title of branch manager for appearance's sake only (p.
31 tsn. Id.), appellee Eliseo Canilao admit that it was just a title for
dignity (p. 36 tsn. June 18, 1965- testimony of appellee Eliseo Canilao
pp. 38-39 tsn April 61965-testimony of corporate secretary Gabino
Canilao (pp- 2-5, Appellants' Reply Brief)
 Upon the other hand, appellee TWS contend that the appellant was an employee of the
appellee Tourist World Service, Inc. and as such was designated manager. 1

xxx xxx xxx

The trial court 2 held for the private respondent on the premise that the private respondent, Tourist World
Service, Inc., being the true lessee, it was within its prerogative to terminate the lease and padlock the
premises. 3 It likewise found the petitioner, Lina Sevilla, to be a mere employee of said Tourist World
Service, Inc. and as such, she was bound by the acts of her employer. 4 The respondent Court of
Appeal 5 rendered an affirmance.

The petitioners now claim that the respondent Court, in sustaining the lower court, erred. Specifically,
they state:

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS
DISCRETION IN HOLDING THAT "THE PADLOCKING OF THE PREMISES BY TOURIST
WORLD SERVICE INC. WITHOUT THE KNOWLEDGE AND CONSENT OF THE APPELLANT
LINA SEVILLA ... WITHOUT NOTIFYING MRS. LINA O. SEVILLA OR ANY OF HER
EMPLOYEES AND WITHOUT INFORMING COUNSEL FOR THE APPELLANT (SEVILIA), WHO
IMMEDIATELY BEFORE THE PADLOCKING INCIDENT, WAS IN CONFERENCE WITH THE
CORPORATE SECRETARY OF TOURIST WORLD SERVICE (ADMITTEDLY THE PERSON WHO
PADLOCKED THE SAID OFFICE), IN THEIR ATTEMP AMICABLY SETTLE THE
CONTROVERSY BETWEEN THE APPELLANT (SEVILLA) AND THE TOURIST WORLD
SERVICE ... (DID NOT) ENTITLE THE LATTER TO THE RELIEF OF DAMAGES" (ANNEX "A"
PP. 7,8 AND ANNEX "B" P. 2) DECISION AGAINST DUE PROCESS WHICH ADHERES TO THE
RULE OF LAW.

II

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS
DISCRETION IN DENYING APPELLANT SEVILLA RELIEF BECAUSE SHE HAD "OFFERED TO
WITHDRAW HER COMP PROVIDED THAT ALL CLAIMS AND COUNTERCLAIMS LODGED
BY BOTH APPELLEES WERE WITHDRAWN." (ANNEX "A" P. 8)

III

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS
DISCRETION IN DENYING-IN FACT NOT PASSING AND RESOLVING-APPELLANT SEVILLAS
CAUSE OF ACTION FOUNDED ON ARTICLES 19, 20 AND 21 OF THE CIVIL CODE ON
RELATIONS.

IV

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS
DISCRETION IN DENYING APPEAL APPELLANT SEVILLA RELIEF YET NOT RESOLVING
HER CLAIM THAT SHE WAS IN JOINT VENTURE WITH TOURIST WORLD SERVICE INC. OR
AT LEAST ITS AGENT COUPLED WITH AN INTEREST WHICH COULD NOT BE TERMINATED
OR REVOKED UNILATERALLY BY TOURIST WORLD SERVICE INC. 6
As a preliminary inquiry, the Court is asked to declare the true nature of the relation between Lina Sevilla
and Tourist World Service, Inc. The respondent Court of see fit to rule on the question, the crucial issue,
in its opinion being "whether or not the padlocking of the premises by the Tourist World Service, Inc.
without the knowledge and consent of the appellant Lina Sevilla entitled the latter to the relief of damages
prayed for and whether or not the evidence for the said appellant supports the contention that the appellee
Tourist World Service, Inc. unilaterally and without the consent of the appellant disconnected the
telephone lines of the Ermita branch office of the appellee Tourist World Service, Inc. 7 Tourist World
Service, Inc., insists, on the other hand, that Lina SEVILLA was a mere employee, being "branch
manager" of its Ermita "branch" office and that inferentially, she had no say on the lease executed with
the private respondent, Segundina Noguera. The petitioners contend, however, that relation between the
between parties was one of joint venture, but concede that "whatever might have been the true
relationship between Sevilla and Tourist World Service," the Rule of Law enjoined Tourist World Service
and Canilao from taking the law into their own hands, 8 in reference to the padlocking now questioned.

The Court finds the resolution of the issue material, for if, as the private respondent, Tourist World
Service, Inc., maintains, that the relation between the parties was in the character of employer and
employee, the courts would have been without jurisdiction to try the case, labor disputes being the
exclusive domain of the Court of Industrial Relations, later, the Bureau Of Labor Relations, pursuant to
statutes then in force. 9

In this jurisdiction, there has been no uniform test to determine the evidence of an employer-employee
relation. In general, we have relied on the so-called right of control test, "where the person for whom the
services are performed reserves a right to control not only the end to be achieved but also the means to be
used in reaching such end." 10 Subsequently, however, we have considered, in addition to the standard of
right-of control, the existing economic conditions prevailing between the parties, like the inclusion of the
employee in the payrolls, in determining the existence of an employer-employee relationship. 11

The records will show that the petitioner, Lina Sevilla, was not subject to control by the private
respondent Tourist World Service, Inc., either as to the result of the enterprise or as to the means used in
connection therewith. In the first place, under the contract of lease covering the Tourist Worlds Ermita
office, she had bound herself in solidum as and for rental payments, an arrangement that would be like
claims of a master-servant relationship. True the respondent Court would later minimize her participation
in the lease as one of mere guaranty, 12 that does not make her an employee of Tourist World, since in any
case, a true employee cannot be made to part with his own money in pursuance of his employer's
business, or otherwise, assume any liability thereof. In that event, the parties must be bound by some
other relation, but certainly not employment.

In the second place, and as found by the Appellate Court, '[w]hen the branch office was opened, the same
was run by the herein appellant Lina O. Sevilla payable to Tourist World Service, Inc. by any airline for
any fare brought in on the effort of Mrs. Lina Sevilla. 13 Under these circumstances, it cannot be said that
Sevilla was under the control of Tourist World Service, Inc. "as to the means used." Sevilla in pursuing
the business, obviously relied on her own gifts and capabilities.

It is further admitted that Sevilla was not in the company's payroll. For her efforts, she retained 4% in
commissions from airline bookings, the remaining 3% going to Tourist World. Unlike an employee then,
who earns a fixed salary usually, she earned compensation in fluctuating amounts depending on her
booking successes.
The fact that Sevilla had been designated 'branch manager" does not make her, ergo, Tourist World's
employee. As we said, employment is determined by the right-of-control test and certain economic
parameters. But titles are weak indicators.

In rejecting Tourist World Service, Inc.'s arguments however, we are not, as a consequence, accepting
Lina Sevilla's own, that is, that the parties had embarked on a joint venture or otherwise, a partnership.
And apparently, Sevilla herself did not recognize the existence of such a relation. In her letter of
November 28, 1961, she expressly 'concedes your [Tourist World Service, Inc.'s] right to stop the
operation of your branch office 14 in effect, accepting Tourist World Service, Inc.'s control over the
manner in which the business was run. A joint venture, including a partnership, presupposes generally a
of standing between the joint co-venturers or partners, in which each party has an equal proprietary
interest in the capital or property contributed 15 and where each party exercises equal rights in the conduct
of the business.16 furthermore, the parties did not hold themselves out as partners, and the building itself
was embellished with the electric sign "Tourist World Service, Inc. 17in lieu of a distinct partnership
name.

It is the Court's considered opinion, that when the petitioner, Lina Sevilla, agreed to (wo)man the private
respondent, Tourist World Service, Inc.'s Ermita office, she must have done so pursuant to a contract of
agency. It is the essence of this contract that the agent renders services "in representation or on behalf of
another. 18 In the case at bar, Sevilla solicited airline fares, but she did so for and on behalf of her
principal, Tourist World Service, Inc. As compensation, she received 4% of the proceeds in the concept of
commissions. And as we said, Sevilla herself based on her letter of November 28, 1961, pre-assumed her
principal's authority as owner of the business undertaking. We are convinced, considering the
circumstances and from the respondent Court's recital of facts, that the ties had contemplated a principal
agent relationship, rather than a joint managament or a partnership..

But unlike simple grants of a power of attorney, the agency that we hereby declare to be compatible with
the intent of the parties, cannot be revoked at will. The reason is that it is one coupled with an interest, the
agency having been created for mutual interest, of the agent and the principal. 19 It appears that Lina
Sevilla is a bona fide travel agent herself, and as such, she had acquired an interest in the business
entrusted to her. Moreover, she had assumed a personal obligation for the operation thereof, holding
herself solidarily liable for the payment of rentals. She continued the business, using her own name, after
Tourist World had stopped further operations. Her interest, obviously, is not to the commissions she
earned as a result of her business transactions, but one that extends to the very subject matter of the power
of management delegated to her. It is an agency that, as we said, cannot be revoked at the pleasure of the
principal. Accordingly, the revocation complained of should entitle the petitioner, Lina Sevilla, to
damages.

As we have stated, the respondent Court avoided this issue, confining itself to the telephone disconnection
and padlocking incidents. Anent the disconnection issue, it is the holding of the Court of Appeals that
there is 'no evidence showing that the Tourist World Service, Inc. disconnected the telephone lines at the
branch office. 20 Yet, what cannot be denied is the fact that Tourist World Service, Inc. did not take pains
to have them reconnected. Assuming, therefore, that it had no hand in the disconnection now complained
of, it had clearly condoned it, and as owner of the telephone lines, it must shoulder responsibility therefor.

The Court of Appeals must likewise be held to be in error with respect to the padlocking incident. For the
fact that Tourist World Service, Inc. was the lessee named in the lease con-tract did not accord it any
authority to terminate that contract without notice to its actual occupant, and to padlock the premises in
such fashion. As this Court has ruled, the petitioner, Lina Sevilla, had acquired a personal stake in the
business itself, and necessarily, in the equipment pertaining thereto. Furthermore, Sevilla was not a
stranger to that contract having been explicitly named therein as a third party in charge of rental payments
(solidarily with Tourist World, Inc.). She could not be ousted from possession as summarily as one would
eject an interloper.

The Court is satisfied that from the chronicle of events, there was indeed some malevolent design to put
the petitioner, Lina Sevilla, in a bad light following disclosures that she had worked for a rival firm. To be
sure, the respondent court speaks of alleged business losses to justify the closure '21 but there is no clear
showing that Tourist World Ermita Branch had in fact sustained such reverses, let alone, the fact that
Sevilla had moonlit for another company. What the evidence discloses, on the other hand, is that
following such an information (that Sevilla was working for another company), Tourist World's board of
directors adopted two resolutions abolishing the office of 'manager" and authorizing the corporate
secretary, the respondent Eliseo Canilao, to effect the takeover of its branch office properties. On January
3, 1962, the private respondents ended the lease over the branch office premises, incidentally, without
notice to her.

It was only on June 4, 1962, and after office hours significantly, that the Ermita office was padlocked,
personally by the respondent Canilao, on the pretext that it was necessary to Protect the interests of the
Tourist World Service. " 22 It is strange indeed that Tourist World Service, Inc. did not find such a need
when it cancelled the lease five months earlier. While Tourist World Service, Inc. would not pretend that
it sought to locate Sevilla to inform her of the closure, but surely, it was aware that after office hours, she
could not have been anywhere near the premises. Capping these series of "offensives," it cut the office's
telephone lines, paralyzing completely its business operations, and in the process, depriving Sevilla
articipation therein.

This conduct on the part of Tourist World Service, Inc. betrays a sinister effort to punish Sevillsa it had
perceived to be disloyalty on her part. It is offensive, in any event, to elementary norms of justice and fair
play.

We rule therefore, that for its unwarranted revocation of the contract of agency, the private respondent,
Tourist World Service, Inc., should be sentenced to pay damages. Under the Civil Code, moral damages
may be awarded for "breaches of contract where the defendant acted ... in bad faith. 23

We likewise condemn Tourist World Service, Inc. to pay further damages for the moral injury done to
Lina Sevilla from its brazen conduct subsequent to the cancellation of the power of attorney granted to
her on the authority of Article 21 of the Civil Code, in relation to Article 2219 (10) thereof

ART. 21. Any person who wilfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the
damage. 24

ART. 2219. Moral damages 25 may be recovered in the following and analogous cases:

xxx xxx xxx

(10) Acts and actions refered into article 21, 26, 27, 28, 29, 30, 32, 34, and 35.

The respondent, Eliseo Canilao, as a joint tortfeasor is likewise hereby ordered to respond for the same
damages in a solidary capacity.
Insofar, however, as the private respondent, Segundina Noguera is concerned, no evidence has been
shown that she had connived with Tourist World Service, Inc. in the disconnection and padlocking
incidents. She cannot therefore be held liable as a cotortfeasor.

The Court considers the sums of P25,000.00 as and for moral damages,24 P10,000.00 as exemplary
damages, 25and P5,000.00 as nominal 26 and/or temperate 27 damages, to be just, fair, and reasonable under
the circumstances.

WHEREFORE, the Decision promulgated on January 23, 1975 as well as the Resolution issued on July
31, 1975, by the respondent Court of Appeals is hereby REVERSED and SET ASIDE. The private
respondent, Tourist World Service, Inc., and Eliseo Canilao, are ORDERED jointly and severally to
indemnify the petitioner, Lina Sevilla, the sum of 25,00.00 as and for moral damages, the sum of
P10,000.00, as and for exemplary damages, and the sum of P5,000.00, as and for nominal and/or
temperate damages.

Costs against said private respondents.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. Nos. 83380-81 November 15, 1989

MAKATI HABERDASHERY, INC., JORGE LEDESMA and CECILIO G.

INOCENCIO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA (Labor Arbiter,
Department of Labor and Employment, National Capital Region), SANDIGAN NG
MANGGAGAWANG PILIPINO (SANDIGAN)-TUCP and its members, JACINTO GARCIANO,
ALFREDO C. BASCO, VICTORIO Y. LAURETO, ESTER NARVAEZ, EUGENIO L. ROBLES,
BELEN N. VISTA, ALEJANDRO A. ESTRABO, VEVENCIO TIRO, CASIMIRO ZAPATA,
GLORIA ESTRABO, LEONORA MENDOZA, MACARIA G. DIMPAS, MERILYN A. VIRAY,
LILY OPINA, JANET SANGDANG, JOSEFINA ALCOCEBA and MARIA
ANGELES, respondents.

Ledesma, Saludo & Associates for petitioners.

Pablo S. Bernardo for private respondents.

FERNAN, C.J.:

This petition for certiorari involving two separate cases filed by private respondents against herein
petitioners assails the decision of respondent National Labor Relations Commission in NLRC CASE No.
7-2603-84 entitled "Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al. v. Makati
Haberdashery and/or Toppers Makati, et al." and NLRC CASE No. 2-428-85 entitled "Sandigan Ng
Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al. v. Toppers Makati, et al.", affirming the
decision of the Labor Arbiter who jointly heard and decided aforesaid cases, finding: (a) petitioners guilty
of illegal dismissal and ordering them to reinstate the dismissed workers and (b) the existence of
employer-employee relationship and granting respondent workers by reason thereof their various
monetary claims.

The undisputed facts are as follows:

Individual complainants, private respondents herein, have been working for petitioner Makati
Haberdashery, Inc. as tailors, seamstress, sewers, basters (manlililip) and "plantsadoras". They are paid on
a piece-rate basis except Maria Angeles and Leonila Serafina who are paid on a monthly basis. In addition
to their piece-rate, they are given a daily allowance of three (P 3.00) pesos provided they report for work
before 9:30 a.m. everyday.

Private respondents are required to work from or before 9:30 a.m. up to 6:00 or 7:00 p.m. from Monday
to Saturday and during peak periods even on Sundays and holidays.
On July 20, 1984, the Sandigan ng Manggagawang Pilipino, a labor organization of the respondent
workers, filed a complaint docketed as NLRC NCR Case No. 7-2603-84 for (a) underpayment of the
basic wage; (b) underpayment of living allowance; (c) non-payment of overtime work; (d) non-payment
of holiday pay; (e) non-payment of service incentive pay; (f) 13th month pay; and (g) benefits provided
for under Wage Orders Nos. 1, 2, 3, 4 and 5. 1

During the pendency of NLRC NCR Case No. 7-2603-84, private respondent Dioscoro Pelobello left with
Salvador Rivera, a salesman of petitioner Haberdashery, an open package which was discovered to
contain a "jusi" barong tagalog. When confronted, Pelobello replied that the same was ordered by
respondent Casimiro Zapata for his customer. Zapata allegedly admitted that he copied the design of
petitioner Haberdashery. But in the afternoon, when again questioned about said barong, Pelobello and
Zapata denied ownership of the same. Consequently a memorandum was issued to each of them to
explain on or before February 4, 1985 why no action should be taken against them for accepting a job
order which is prejudicial and in direct competition with the business of the company. 2 Both respondents
allegedly did not submit their explanation and did not report for work. 3 Hence, they were dismissed by
petitioners on February 4, 1985. They countered by filing a complaint for illegal dismissal docketed as
NLRC NCR Case No. 2-428-85 on February 5, 1985. 4

On June 10, 1986, Labor Arbiter Ceferina J. Diosana rendered judgment, the dispositive portion of which
reads:

WHEREFORE, judgment is hereby rendered in NLRC NCR Case No. 2-428-85 finding
respondents guilty of illegal dismissal and ordering them to reinstate Dioscoro Pelobello
and Casimiro Zapata to their respective or similar positions without loss of seniority
rights, with full backwages from July 4, 1985 up to actual reinstatement. The charge of
unfair labor practice is dismissed for lack of merit.

In NLRC NCR Case No. 7-26030-84, the complainants' claims for underpayment re
violation of the minimum wage law is hereby ordered dismissed for lack of merit.

Respondents are hereby found to have violated the decrees on the cost of living
allowance, service incentive leave pay and the 13th Month Pay. In view thereof, the
economic analyst of the Commission is directed to compute the monetary awards due
each complainant based on the available records of the respondents retroactive as of three
years prior to the filing of the instant case.

SO ORDERED. 5

From the foregoing decision, petitioners appealed to the NLRC. The latter on March 30, 1988 affirmed
said decision but limited the backwages awarded the Dioscoro Pelobello and Casimiro Zapata to only one
(1) year. 6

After their motion for reconsideration was denied, petitioners filed the instant petition raising the
following issues:

THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT AN EMPLOYER-EMPLOYEE

RELATIONSHIP EXISTS BETWEEN PETITIONER HABERDASHERY AND RESPONDENTS
WORKERS.
II

THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT RESPONDENTS WORKERS

ARE ENTITLED TO MONETARY CLAIMS DESPITE THE FINDING THAT THEY ARE NOT
ENTITLED TO MINIMUM WAGE.

III

THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT RESPONDENTS PELOBELLO

AND ZAPATA WERE ILLEGALLY DISMISSED. 7

The first issue which is the pivotal issue in this case is resolved in favor of private respondents. We have
repeatedly held in countless decisions that the test of employer-employee relationship is four-fold: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4)
the power to control the employee's conduct. It is the so called "control test" that is the most important
element. 8 This simply means the determination of whether the employer controls or has reserved the right
to control the employee not only as to the result of the work but also as to the means and method by
which the same is to be accomplished. 9

The facts at bar indubitably reveal that the most important requisite of control is present. As gleaned from
the operations of petitioner, when a customer enters into a contract with the haberdashery or its proprietor,
the latter directs an employee who may be a tailor, pattern maker, sewer or "plantsadora" to take the
customer's measurements, and to sew the pants, coat or shirt as specified by the customer. Supervision is
actively manifested in all these aspects the manner and quality of cutting, sewing and ironing.

Furthermore, the presence of control is immediately evident in this memorandum issued by Assistant
Manager Cecilio B. Inocencio, Jr. dated May 30, 1981 addressed to Topper's Makati Tailors which reads
in part:

4. Effective immediately, new procedures shall be followed:

A. To follow instruction and orders from the undersigned Roger Valderama, Ruben
Delos Reyes and Ofel Bautista. Other than this person (sic) must ask permission to the
above mentioned before giving orders or instructions to the tailors.

B. Before accepting the job orders tailors must check the materials, job orders, due dates
and other things to maximize the efficiency of our production. The materials should be
checked (sic) if it is matched (sic) with the sample, together with the number of the job
order.

C. Effective immediately all job orders must be finished one day before the due date.
This can be done by proper scheduling of job order and if you will cooperate with your
supervisors. If you have many due dates for certain day, advise Ruben or Ofel at once so
that they can make necessary adjustment on due dates.

D. Alteration-Before accepting alteration person attending on customs (sic) must ask first
or must advise the tailors regarding the due dates so that we can eliminate what we call
'Bitin'.
 E. If there is any problem regarding supervisors or co-tailor inside our shop, consult with
me at once settle the problem. Fighting inside the shop is strictly prohibited. Any tailor
violating this memorandum will be subject to disciplinary action.

For strict compliance. 10

From this memorandum alone, it is evident that petitioner has reserved the right to control its employees
not only as to the result but also the means and methods by which the same are to be accomplished. That
private respondents are regular employees is further proven by the fact that they have to report for work
regularly from 9:30 a.m. to 6:00 or 7:00 p.m. and are paid an additional allowance of P 3.00 daily if they
report for work before 9:30 a.m. and which is forfeited when they arrive at or after 9:30 a.m. 11

Since private respondents are regular employees, necessarily the argument that they are independent
contractors must fail. As established in the preceding paragraphs, private respondents did not exercise
independence in their own methods, but on the contrary were subject to the control of petitioners from the
beginning of their tasks to their completion. Unlike independent contractors who generally rely on their
own resources, the equipment, tools, accessories, and paraphernalia used by private respondents are
supplied and owned by petitioners. Private respondents are totally dependent on petitioners in all these
aspects.

Coming now to the second issue, there is no dispute that private respondents are entitled to the Minimum
Wage as mandated by Section 2(g) of Letter of Instruction No. 829, Rules Implementing Presidential
Decree No. 1614 and reiterated in Section 3(f), Rules Implementing Presidential Decree 1713 which
explicitly states that, "All employees paid by the result shall receive not less than the applicable new
minimum wage rates for eight (8) hours work a day, except where a payment by result rate has been
established by the Secretary of Labor. ..." 12 No such rate has been established in this case.

But all these notwithstanding, the question as to whether or not there is in fact an underpayment of
minimum wages to private respondents has already been resolved in the decision of the Labor Arbiter
where he stated: "Hence, for lack of sufficient evidence to support the claims of the complainants for
alleged violation of the minimum wage, their claims for underpayment re violation of the Minimum Wage
Law under Wage Orders Nos. 1, 2, 3, 4, and 5 must perforce fall." 13

The records show that private respondents did not appeal the above ruling of the Labor Arbiter to the
NLRC; neither did they file any petition raising that issue in the Supreme Court. Accordingly, insofar as
this case is concerned, that issue has been laid to rest. As to private respondents, the judgment may be
said to have attained finality. For it is a well-settled rule in this jurisdiction that "an appellee who has not
himself appealed cannot obtain from the appellate court-, any affirmative relief other than the ones
granted in the decision of the court below. " 14

As a consequence of their status as regular employees of the petitioners, they can claim cost of living
allowance. This is apparent from the provision defining the employees entitled to said allowance, thus: "...
All workers in the private sector, regardless of their position, designation or status, and irrespective of the
method by which their wages are paid. " 15

Private respondents are also entitled to claim their 13th Month Pay under Section 3(e) of the Rules and
Regulations Implementing P.D. No. 851 which provides:

Section 3. Employers covered. The Decree shall apply to all employers except to:
 xxx xxx xxx

(e) Employers of those who are paid on purely commission, boundary, or task basis, and
those who are paid a fixed amount for performing a specific work, irrespective of the
time consumed in the performance thereof, except where the workers are paid on piece-
rate basis in which case the employer shall be covered by this issuance insofar as such
workers are concerned. (Emphasis supplied.)

On the other hand, while private respondents are entitled to Minimum Wage, COLA and 13th Month Pay,
they are not entitled to service incentive leave pay because as piece-rate workers being paid at a fixed
amount for performing work irrespective of time consumed in the performance thereof, they fall under
one of the exceptions stated in Section 1(d), Rule V, Implementing Regulations, Book III, Labor Code.
For the same reason private respondents cannot also claim holiday pay (Section 1(e), Rule IV,
Implementing Regulations, Book III, Labor Code).

With respect to the last issue, it is apparent that public respondents have misread the evidence, for it does
show that a violation of the employer's rules has been committed and the evidence of such transgression,
the copied barong tagalog, was in the possession of Pelobello who pointed to Zapata as the owner. When
required by their employer to explain in a memorandum issued to each of them, they not only failed to do
so but instead went on AWOL (absence without official leave), waited for the period to explain to expire
and for petitioner to dismiss them. They thereafter filed an action for illegal dismissal on the far-fetched
ground that they were dismissed because of union activities. Assuming that such acts do not constitute
abandonment of their jobs as insisted by private respondents, their blatant disregard of their employer's
memorandum is undoubtedly an open defiance to the lawful orders of the latter, a justifiable ground for
termination of employment by the employer expressly provided for in Article 283(a) of the Labor Code as
well as a clear indication of guilt for the commission of acts inimical to the interests of the employer,
another justifiable ground for dismissal under the same Article of the Labor Code, paragraph (c). Well
established in our jurisprudence is the right of an employer to dismiss an employee whose continuance in
the service is inimical to the employer's interest. 16

In fact the Labor Arbiter himself to whom the explanation of private respondents was submitted gave no
credence to their version and found their excuses that said barong tagalog was the one they got from the
embroiderer for the Assistant Manager who was investigating them, unbelievable.

Under the circumstances, it is evident that there is no illegal dismissal of said employees. Thus, We have
ruled that:

No employer may rationally be expected to continue in employment a person whose lack

of morals, respect and loyalty to his employer, regard for his employer's rules, and
appreciation of the dignity and responsibility of his office, has so plainly and completely
been bared.

That there should be concern, sympathy, and solicitude for the rights and welfare of the
working class, is meet and proper. That in controversies between a laborer and his
master, doubts reasonably arising from the evidence, or in the interpretation of
agreements and writings should be resolved in the former's favor, is not an unreasonable
or unfair rule. But that disregard of the employer's own rights and interests can be
justified by that concern and solicitude is unjust and unacceptable. (Stanford
Microsystems, Inc. v. NLRC, 157 SCRA 414-415 [1988] ).
The law is protecting the rights of the laborer authorizes neither oppression nor self-destruction of the
employer. 17 More importantly, while the Constitution is committed to the policy of social justice and the
protection of the working class, it should not be supposed that every labor dispute will automatically be
decided in favor of labor. 18

Finally, it has been established that the right to dismiss or otherwise impose discriplinary sanctions upon
an employee for just and valid cause, pertains in the first place to the employer, as well as the authority to
determine the existence of said cause in accordance with the norms of due process. 19

There is no evidence that the employer violated said norms. On the contrary, private respondents who
vigorously insist on the existence of employer-employee relationship, because of the supervision and
control of their employer over them, were the very ones who exhibited their lack of respect and regard for
their employer's rules.

Under the foregoing facts, it is evident that petitioner Haberdashery had valid grounds to terminate the
services of private respondents.

WHEREFORE, the decision of the National Labor Relations Commission dated March 30, 1988 and that
of the Labor Arbiter dated June 10, 1986 are hereby modified. The complaint filed by Pelobello and
Zapata for illegal dismissal docketed as NLRC NCR Case No. 2-428-85 is dismissed for lack of factual
and legal bases. Award of service incentive leave pay to private respondents is deleted.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. L-59229 August 22, 1991

HIJOS DE F. ESCAO INC., and PIER 8 ARRASTRE AND STEVEDORING SERVICES,

INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, NATIONAL ORGANIZATION OF
WORKINGMEN (NOWM) PSSLU-TUCP and ROLANDO VILLALOBOS, respondents.

Beltran, Beltran & Beltran for petitioners.

Bautista, Santiago & Associates for private respondents.

FELICIANO, J.:p

Petitioners seek to set aside the Decision of the National Labor Relations Commission ("NLRC") dated
11 November 1981, which affirmed the Decision of the Labor Arbiter dated 28 February 1980.

Private respondent National Organization of Workingmen ("NOWM") PSSLU-TUCP is a labor

organization that counts among its members a majority of the laborers of petitioner Pier 8 Arrastre &
Stevedoring Services, Inc. ("PIER 8 A&S") consisting, among others, of stevedores, dockworkers,
sweepers and forklift operators (hereinafter collectively referred to as "the stevedores"). On 31 July 1978,
NOWM PSSLU-TUCP and about 300 stevedores filed with the then Ministry of Labor and Employment
("MOLE") a complaint 1 for unfair labor practice ULP and illegal dismissal against PIER 8 A&S.

On 8 September 1978, NOWM PSSLU-TUCP amended its complaint to include the monetary claims of
the stevedores for overtime compensation, legal holiday pay, emergency cost of living allowance, 13th
month pay, night shift differential pay, and the difference between the salaries they received and that
prescribed under the minimum wage law. The complaint was also amended to implead petitioner Hijos de
F. Escao, Inc. (Escao) as respondent before the MOLE. 2

The MOLE Director in the National Capital Region certified for compulsory arbitration only the claims
for illegal dismissal and ULP Considering that NOWM PSSLU-TUCP wanted to include as well the other
issues it had raised in the amended complaint, it filed a motion for reconsideration. The motion was
denied because money claims, according to the MOLE Director, should be brought against Escao and
PIER 8 A&S in a separate complaint.

On the basis of the position papers submitted by the parties and the annexes attached thereto, the case was
considered submitted for resolution. On 28 February 1980, the Labor Arbiter rendered a Decision 3 with
the following dispositive portion:
 WHEREFORE, consonant with the foregoing premises, the respondents Hijos de F.
Escao and Pier 8 Arrastre and Stevedoring Services, Inc. are hereby found guilty of
committing acts of unfair labor practice and are ordered to jointly and severally reinstate
all of the petitioners named in the amended complaint, with payment of full backwages
counted from the time they were illegally dismissed which was on August 10, 1978 up to
March 27, 1979, inclusive, when the petitioners admitted having received return to work
notice from the respondent but refused to comply in view of the pendency of the present
case, based on their individual rate at the time of their dismissal or on the minimum wage
then prevailing whichever is more beneficial to them.

For purposes of this decision, the Socio-Economic Analyst of this branch is hereby
directed to compute the backwages of the individual petitioners as mandated herein, and
to submit his report within ten 10 days from receipt hereof which shall form part of this
award.

SO ORDERED.

Petitioners appealed to the NLRC which, however, affirmed the Decision of the Labor Arbiter.

The instant Petition for certiorari imputes grave abuse of discretion to the NLRC in upholding the finding
of the Labor Arbiter that the stevedores are employees not only of PIER 8 A&S but also of Escao.
Petitioners also assail that portion of the Decision which directed them to reinstate the dismissed
stevedores with the obligation to pay backwages from 10 August 1978 to 27 March 1979.

In his Decision, the Labor Arbiter took the view that PIER 8 A&S was a labor only contractor and held
that Escao was the principal employer of the stevedores. For that reason, the Labor Arbiter adjudged the
petitioners solidarily liable for payment of backwages to the stevedores as well as for reinstatement.

While petitioner PIER 8 A&S does not dispute that the stevedores were its employees, petitioner Escao
denies the existence of an employer-employee relationship between it and the stevedores. Escao
therefore contends that liability, if any, should attach only to PIER 8 A&S.

PIER 8 A&S is a corporation providing Arrastre and stevedoring services to vessels docked at Pier 8 of
the Manila North Harbor. Prior to the incorporation of PIER 8 A&S two (2) stevedoring companies had
been servicing vessels docking at Pier 8. One of these was the Manila Integrated Services, Inc. MISI
which was servicing Escao vessels, then berthing at Pier 8. The other was the San Nicolas Stevedoring
and Arrastre Services, Inc. (SNSASI) which was servicing Compania Maritima vessels. Aside, of course,
from MISI and SNSASI there were individual contractors known as the "cabos" who were operating in
Pier 8.

On 11 July 1974, the Philippine Port Authority ("PPA") was created pursuant to the policy of the State to
implement an integrated program of port development for the entire country. 4 Towards this end, the PPA
issued Administrative Order No. 1377 specifically adopting the policy of "one pier, one Arrastre and/or
stevedoring company." MISI and SNSASI merged to form the Pier 8 Arrastre and Stevedoring Services,
Inc.

Sometime in June 1978, Escao had transferred berth to Pier 16 with the approval of the PPA. PIER 8
A&S then started to encounter problems; it found its business severely reduced with only Compania
Maritima vessels to service. Even if it had wanted to continue servicing the vessels of Escao at Pier 16,
that was simply not possible as there was another company exclusively authorized to handle and render
Arrastre and stevedoring services at Pier 16.

Because of its resulting manpower surplus, PIER 8 A&S altered the work schedule of its stevedores by
rotating them. The rotation scheme was resisted by the stevedores, especially those formerly assigned to
service Escao vessels. It appears that the employees formerly belonging to MISI continued to service
Escao vessels in like manner that those employees formerly belonging to SNSASI continued to service
Compania Maritima vessels, although MISI and SNSASI had already merged to form PIER 8 A&S The
affected stevedores boycotted Pier 8 leading to their severance from employment by PIER 8 A&S on 10
August 1978. Their refusal to work continued even after they were served with a return-to-work order.

The stevedores claim that since they had long been servicing Escao vessels, i.e. from the time Escao
was exclusively serviced by MISI until the time MISI was merged with SNSASI to form PIER 8 A&S
they should also be considered as employees of Escao. Escao disclaimed any employment relationship
with the stevedores. In its Position Paper, Escao alleged that the stevedores are included in the payroll of
PIER 8 A&S and that the SSS and Medicare contributions of the stevedores are paid by PIER 8 A&S as
well.

It is firmly settled that the existence or non-existence of the employer-employee relationship is commonly
to be determined by examination of certain factors or aspects of that relationship. These include: (a) the
manner of selection and engagement of the putative employee; (b) the mode of payment of wages; (c) the
presence or absence of the power of dismissal; and (d) the presence or absence of a power to control the
putative employee's conduct. 5

The Court notes that in finding against PIER 8 A&S and Escao the Labor Arbiter relied solely on the
position paper of the parties. The record of the case is bare of evidence tending to support such
allegations; what is found in the record instead are the self-serving statements from both parties. It is not
clear to the Court from examination of the record which entity paid the salaries of the stevedores. While
the stevedores attached to their amended complaint a list of their daily wages set forth opposite their
individual names under the heading "Hijos de F. Escao Inc. and/or Pier 8 Arrastre and Stevedoring
Services, Inc. 6 apparently to show that they are paid for their services by either or both of petitioners,
they did not submit direct evidence, e.g., copies of payrolls and remittances to the SSS and Medicare,
establishing this fact. Further, the stevedores failed to substantiate their allegation that the supervisors of
Escao had control over them while discharging their (stevedores') duties. On the contrary, their Position
Paper submitted to the Labor Arbiter disclosed that the supervisors of Escao "merely supervised" them.

The record includes letters written by the National President of NOWM PSSLU-TUC to which the
stevedores belong-relating to collective bargaining and other operating matters, were all addressed to the
management of PIER 8 A&S indicating that they recognized PIER 8 A&S as their employer. Specifically,
in the letter dated 21 May 1977, the stevedores proposed that PIER 8 A&S recognize their union as the
sole and exclusive representative of the stevedores for the purpose of collective bargaining. They also
sought to submit for collective bargaining with PIER 8 A&S such other labor standard issues as wage
increases, 13th month pay and vacation and sick leave pay. 7

The stevedores, however, now contend that PIER 8 A&S is not an independent contract but a labor only
contractor. In their Amended Complaint and Position Paper, the stevedores alleged that:

(1) They perform their duties or work assignments under the close supervision of
supervisors of respondent Hijos de F. Escao Inc.;
 (2) The machineries, equipment, tools and other facilities complainants used, while in the
performance of their jobs, are owned by respondent Hijos de F. Escao, Inc.;

(3) The jobs they were performing from the time they were first employed, until their
dismissals, are principal phases of respondent's operations; and

(4) The so-called Pier 8 Arrastre & Stevedoring Services, Inc. is a mere middleman; its
vital role is purely one of supplying workers to respondent Hijos de F. Escao, Inc. in
short, a mere recruiting agent. Plainly, said contractor can be categorized as an agent of
respondent Hijos de F. Escao, Inc. as it performs activities directly related to the
principal business of said Hijos de F. Escao, Inc.

Although the record does not show that the stevedores had submitted any evidence to fortify their claim
that PIER 8 A&S is a labor only contractor, the Labor Arbiter simply conceded that claim to be factual.
The Labor Arbiter added that the business of PIER 8 A&S is "desirable and indispensable in the business
of Hijos de F. Escao and without [the stevedores], its vessels could not be operated."

The Court is unable to agree with the conclusion reached by the Labor Arbiter, particularly that portion
where the Labor Arbiter supposed stevedoring to be an indispensable part of the business of Escao.
Escao is a corporation engaged in inter-island shipping business, being the operator of the Escao
Shipping Lines. It was not alleged, nor has it been shown, that Escao or any other shipping company is
also engaged in Arrastre and stevedoring services. Stevedoring is not ordinarily included in the business
of transporting goods, it (stevedoring) being a special kind of service which involves the loading
unloading of cargo on or from a vessel on port. It consists of the handling of cargo from the hold of the
ship to the dock, in case of pier-side unloading, or to a barge, in case of unloading at sea. The loading on a
ship of outgoing cargo is also part of stevedoring work. 8Arrastre, upon the other hand, involves the
handling of cargo deposited on the wharf or between the establishment of the consignee or shipper and
the ships tackle. 9 Considering that a shipping company is not normally or customarily engaged in
stevedoring and arrastre activities either for itself or other vessels, it contracts with other companies
offering those services. The employees, however, of the stevedoring and/or arrastre company should not
be deemed the employees of the shipping company, in the absence of any showing, that the arrastre
and/or stevedoring company in fact acted as an agent only of the shipping company. No such showing
was made in this case.

We turn next to the stevedores' contention that PIER 8 A&S is guilty of ULP. In this respect, the Labor
Arbiter had found that:

Now comes the issue of unfair labor practice. This Labor Arbiter believes that
respondents are guilty as charged. The unfair labor practice acts of the respondents
started when they came to know that the petitioners have organized themselves and
affiliated with the NOWM Subsequent acts of the respondents like requiring the
petitioners to disaffiliate with the NOWM and affiliate with the General Maritime
Stevedores Union and later on to Independent Workers Union, requiring them to sign
applications for membership therein, they were threatened and coerced, are all acts of
unfair labor practices. Thereafter, the petitioners' working schedules were rotated when
the respondent Hijos de F. Escao transferred to Pier 16 through the alleged approval of
the Philippine Port Authority and later on the said petitioners were left without work,
were all in furtherance of such unfair labor practice acts. ... 10
Both the Constitution and the Labor Code guarantee to the stevedores a right to self-organization. It was
unlawful for PIER 8 A&S to deprive them of that right by its undue interference. The Constitution
(Article III, Section 7) expressly recognizes the right of employees, whether of the public or the private
sector, to form unions. Article 248 of the Labor Code provides:

Art. 248. Unfair labor practices of employers. It shall be unlawful for an employer to
commit any of the following unfair labor practice:

(a) To interfere with, restrain or coerce employees in the exercise of their right to self-
organization;

(b) To require as a condition of employment that a person or an employee shall not join a
labor organization or shall withdraw from one to which he belongs;

(c) To contract out services or functions being performed by union members when such
will interfere with, restrain or coerce employees in the exercise of their rights to self-
organization;

(d) To initiate, dominate, assist or otherwise interfere with the formation or

administration of any labor organization, including the giving of financial or other
support to it or its organizations or supporters;

(e) To discriminate in regard to wages, hours of work, and other terms and conditions of
employment in order to encourage or discourage membership in any labor organization.

xxx xxx xxx

(Emphasis supplied.)

Not only was PIER 8 A&S guilty of ULP; it was also liable for illegal dismissal. PIER 8 A&S did not
obtain prior clearance from the MOLE before it dismissed the stevedores, as required by the law then in
force which read:

Section 1. Requirement for shutdown or dismissal. No employer may shut down his
establishment or dismiss any of his employees with at least one year of service during the
last two years, whether the service is broken or continuous, without prior clearance issued
therefor in accordance with this Rule. Any provision in a collective bargaining agreement
dispensing with the clearance requirement shall be null and void.

Section 2. Shutdown or dismissal without clearance. Any shutdown or dismissal

without prior clearance shall be conclusively presumed to be a termination of
employment without a just cause. The Regional Director shall, in such case, order the
immediate reinstatement of the employee and the payment of his wages from the time of
the shutdown or dismissal until the time of reinstatement. 11

B.P. Blg. 130 amended the Labor Code on 4 September 1981 by abolishing the requirement of prior
clearance from the MOLE but since the dismissal of the stevedores was effected prior to the promulgation
of B.P. Blg. 130, PIER 8 A&S was then bound to comply with the old law. The Court, interpreting
Sections 1 and 2 above quoted, has consistently held that a dismissal without said clearance shall be
conclusively presumed a termination without just cause. 12 The record is bare of any evidence that could
compel the Court to overturn the factual findings of the Labor Arbiter on this point.

WHEREFORE, considering the absence of an employer-employee relationship between Hijos de F.

Escao, Inc. and private respondents, the Decision of the Labor Arbiter dated 28 February 1980 in NLRC
Case No. RB-IV-2326-79 and the Decision of the NLRC dated 11 November 1981 are hereby
MODIFIED so that only Pier 8 Arrastre & Stevedoring Services, Inc. shall be liable for reinstatement and
payment of backwages. As so modified, both Decisions are hereby AFFIRMED. No costs.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Bidin and Davide, Jr., JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-75038 August 23, 1993

ELIAS VILLUGA, RENATO ABISTADO, JILL MENDOZA, ANDRES ABAD, BENJAMIN

BRIZUELA, NORLITO LADIA, MARCELO AGUILAN, DAVID ORO, NELIA BRIZUELA,
FLORA ESCOBIDO, JUSTILITA CABANIG, and DOMINGO SAGUIT, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) and BROAD STREET
TAILORING and/or RODOLFO ZAPANTA, respondents.

Balguma, Macasaet & Associates for petitioners.

Teresita Gandionco Oledan for private respondents.

NOCON, J.:

A basic factor underlying the exercise of rights and the filing of claims for benefits under the Labor Code
and other presidential issuances or labor legislations is the status and nature of one's employment.
Whether an employer-employee relationship exist and whether such employment is managerial in
character or that of a rank and file employee are primordial considerations before extending labor
benefits. Thus, petitioners in this case seek a definitive ruling on the status and nature of their
employment with Broad Street Tailoring and pray for the nullification of the resolution dated May 12,
1986 of the National Labor Relations Commissions in NLRC Case No. RB-IV- 21558-78-T affirming the
decision of Labor Arbiter Ernilo V. Pealosa dated May 28, 1979, which held eleven of them as
independent contractors and the remaining one as employee but of managerial rank.

The facts of the case shows that petitioner Elias Villuga was employed as cutter in the tailoring shop
owned by private respondent Rodolfo Zapanta and known as Broad Street Tailoring located at Shaw
Boulevard, Mandaluyong, Metro Manila. As cutter, he was paid a fixed monthly salary of P840.00 and a
monthly transportation allowance of P40.00. In addition to his work as cutter, Villuga was assigned the
chore of distributing work to the shop's tailors or sewers when both the shop's manager and assistant
manager would be absent. He saw to it that their work conformed with the pattern he had prepared and if
not, he had them redone, repaired or resewn.

The other petitioners were either ironers, repairmen and sewers. They were paid a fixed amount for every
item ironed, repaired or sewn, regardless of the time consumed in accomplishing the task. Petitioners did
not fill up any time record since they did not observe regular or fixed hours of work. They were allowed
to perform their work at home especially when the volume of work, which depended on the number of job
orders, could no longer be coped up with.
From February 17 to 22, 1978, petitioner Villuga failed to report for work allegedly due to illness. For not
properly notifying his employer, he was considered to have abandoned his work.

In a complaint dated March 27, 1978, filed with the Regional Office of the Department of Labor, Villuga
claimed that he was refused admittance when he reported for work after his absence, allegedly due to his
active participation in the union organized by private respondent's tailors. He further claimed that he was
not paid overtime pay, holiday pay, premium pay for work done on rest days and holidays, service
incentive leave pay and 13th month pay.

Petitioners Renato Abistado, Jill Mendoza, Benjamin Brizuela and David Oro also claimed that they were
dismissed from their employment because they joined the Philippine Social Security Labor Union
(PSSLU). Petitioners Andres Abad, Norlito Ladia, Marcelo Aguilan, Nelia Brizuela, Flora Escobido,
Justilita Cabaneg and Domingo Saguit claimed that they stopped working because private respondents
gave them few pieces of work to do after learning of their membership with PSSLU. All the petitioners
laid claims under the different labor standard laws which private respondent allegedly violated.

On May 28, 1979, Labor Arbiter Ernilo V. Pealosa rendered a decision ordering the dismissal of the
complaint for unfair labor practices, illegal dismissal and other money claims except petitioner Villuga's
claim for 13th month pay for the years 1976, 1977 and 1980. The dispositive portion of the decision states
as follows:

WHEREFORE, premises considered, the respondent Broad Street Tailoring and/or

Rodolfo Zapanta are hereby ordered to pay complainant Elias Villuga the sum of ONE
THOUSAND TWO HUNDRED FORTY-EIGHT PESOS AND SIXTY-SIX
CENTAVOS (P1,248.66) representing his 13th month pay for the years 1976, 1977 and
1978. His other claims in this case are hereby denied for lack of merit.

The complaint insofar as the other eleven (11) complainants are concerned should be, as
it is hereby dismissed for want of jurisdiction. 1

On appeal, the National Labor Relations Commission affirmed the questioned decision in a resolution
dated May 12, 1986, the dispositive portion of which states as follows:

WHEREFORE, premises considered, the decision appealed from is, as it is hereby

AFFIRMED, and the appeal dismissed. 2

Presiding Commissioner Guillermo C. Medina merely concurred in the result while Commissioner
Gabriel M. Gatchalian rendered a dissenting opinion which states as follows:

I am for upholding employer-employee relationship as argued by the complainants before

the Labor Arbiter and on appeal. The further fact that the proposed decision recognizes
complainant's status as piece-rate worker all the more crystallizes employer-employee
relationship the benefits prayed for must be granted. 3

Hence, petitioners filed this instant certiorari case on the following grounds:

1. That the respondent National Labor Relations Commission abused its discretion when
it ruled that petitioner/complainant, Elias Villuga falls within the category of a
managerial employee;
 2. . . . when it ruled that the herein petitioners were not dismissed by reason of their union
activities;

3. . . . when it ruled that petitioners Andres Abad, Benjamin Brizuela, Norlito Ladia,
Marcelo Aguilan, David Oro, Nelia Brizuela, Flora Escobido, Justilita Cabaneg and
Domingo Saguit were not employees of private respondents but were contractors.

4. . . . when it ruled that petitioner Elias Villuga is not entitled to overtime pay and
services for Sundays and Legal Holidays; and

5. . . . when it failed to grant petitioners their respective claims under the provisions of
P.D. Nos. 925, 1123 and 851. 4

Under Rule 1, Section 2(c), Book III of the Implementing Rules of Labor Code, to be a member of a
managerial staff, the following elements must concur or co-exist, to wit: (1) that his primary duty consists
of the performance of work directly related to management policies; (2) that he customarily and regularly
exercises discretion and independent judgment in the performance of his functions; (3) that he regularly
and directly assists in the management of the establishment; and (4) that he does not devote his twenty per
cent of his time to work other than those described above.

Applying the above criteria to petitioner Elias Villuga's case, it is undisputed that his primary work or
duty is to cut or prepare patterns for items to be sewn, not to lay down or implement any of the
management policies, as there is a manager and an assistant manager who perform said functions. It is
true that in the absence of the manager the assistant manager, he distributes and assigns work to
employees but such duty, though involving discretion, is occasional and not regular or customary. He had
also the authority to order the repair or resewing of defective item but such authority is part and parcel of
his function as cutter to see to it that the items cut are sewn correctly lest the defective nature of the
workmanship be attributed to his "poor cutting." Elias Villuga does not participate in policy-making.
Rather, the functions of his position involve execution of approved and established policies. In Franklin
Baker Company of the Philippines v. Trajano, 5 it was held that employees who do not participate in
policy-making but are given ready policies to execute and standard practices to observe are not
managerial employees. The test of "supervisory or managerial status" depends on whether a person
possesses authority that is not merely routinary or clerical in nature but one that requires use of
independent judgment. In other words, the functions of the position are not managerial in nature if they
only execute approved and established policies leaving little or no discretion at all whether to implement
said policies or not. 6

Consequently, the exclusion of Villuga from the benefits claimed under Article 87 (overtime pay and
premium pay for holiday and rest day work), Article 94, (holiday pay), and Article 95 (service incentive
leave pay) of the Labor Code, on the ground that he is a managerial employee is unwarranted. He is
definitely a rank and file employee hired to perform the work of the cutter and not hired to perform
supervisory or managerial functions. The fact that he is uniformly paid by the month does not exclude
him from the benefits of holiday pay as held in the case of Insular Bank of America Employees Union
v. Inciong. 7 He should therefore be paid in addition to the 13th month pay, his overtime pay, holiday pay,
premium pay for holiday and rest day, and service incentive leave pay.

As to the dismissal of the charge for unfair labor practices of private respondent consisting of termination
of employment of petitioners and acts of discrimination against members of the labor union, the
respondent Commission correctly held the absence of evidence that Mr. Zapanta was aware of petitioners'
alleged union membership on February 22, 1978 as the notice of union existence in the establishment
with proposal for recognition and collective bargaining negotiation was received by management only an
March 3, 1978. Indeed, self-serving allegations without concrete proof that the private respondent knew
of their membership in the union and accordingly reacted against their membership do not suffice.

Nor is private respondent's claim that petitioner Villuga abandoned his work acceptable. For
abandonment to constitute a valid cause for dismissal, there must be a deliberate and unjustified refusal of
the employee to resume his employment. Mere absence is not sufficient, it must be accompanied by overt
acts unerringly pointing to the fact that the employee simply does not want to work anymore. 8 At any
rate, dismissal of an employee due to his prolonged absence without leave by reason of illness duly
established by the presentation of a medical certificate is not justified. 9 In the case at bar, however,
considering that petitioner Villuga absented himself for four (4) days without leave and without
submitting a medical certificate to support his claim of illness, the imposition of a sanction is justified, but
surely, not dismissal, in the light of the fact that this is petitioner's first offense. In lieu of reinstatement,
petitioner Villuga should be paid separation pay where reinstatement can no longer be effected in view of
the long passage of time or because of the realities of the situation. 10 But petitioner should not be granted
backwages in addition to reinstatement as the same is not just and equitable under the circumstances
considering that he was not entirely free from blame. 11

As to the other eleven petitioners, there is no clear showing that they were dismissed because the
circumstances surrounding their dismissal were not even alleged. However, we disagree with the finding
of respondent Commission that the eleven petitioners are independent contractors.

For an employer-employee relationship to exist, the following elements are generally considered: "(1) the
selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal and (4) the power to control the employee's
conduct." 12

Noting that the herein petitioners were oftentimes allowed to perform their work at home and were paid
wages on a piece-rate basis, the respondent Commission apparently found the second and fourth elements
lacking and ruled that "there is no employer-employee relationship, for it is clear that respondents are
interested only in the result and not in the means and manner and how the result is obtained."

Respondent Commission is in error. The mere fact that petitioners were paid on a piece-rate basis is no
argument that herein petitioners were not employees. The term "wage" has been broadly defined in
Article 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of money
whether fixed or ascertained on a time, task, piece or commission
basis. . . ." The facts of this case indicate that payment by the piece is just a method of compensation and
does not define the essence of the
relation. 13 The petitioners were allowed to perform their work at home does not likewise imply absence
of control and supervision. The control test calls merely for the existence of a right to control the manner
of doing the work, not the actual exercise of the right. 14

In determining whether the relationship is that of employer and employee or one of an independent
contractor, "each case must be determined on its own facts and all the features of the relationship are to be
considered." 15Considering that petitioners who are either sewers, repairmen or ironer, have been in the
employ of private respondent as early as 1972 or at the latest in 1976, faithfully rendering services which
are desirable or necessary for the business of private respondent, and observing management's approved
standards set for their respective lines of work as well as the customers' specifications, petitioners should
be considered employees, not independent contractors.
Independent contractors are those who exercise independent employment, contracting to do a piece of
work according to their own methods and without being subjected to control of their employer except as
to the result of their work. By the nature of the different phases of work in a tailoring shop where the
customers' specifications must be followed to the letter, it is inconceivable that the workers therein would
not be subjected to control.

In Rosario Brothers, Inc. v. Ople, 16 this Court ruled that tailors and similar workers hired in the tailoring
department, although paid weekly wages on piece work basis, are employees not independent contractors.
Accordingly, as regular employees, paid on a piece-rate basis, petitioners are not entitled to overtime pay,
holiday pay, premium pay for holiday/rest day and service incentive leave pay. Their claim for separation
pay should also be defined for lack of evidence that they were in fact dismissed by private respondent.
They should be paid, however, their 13th month pay under P.D. 851, since they are employees not
independent contractors.

WHEREFORE, in view of the foregoing reasons, the assailed decision of respondent National Labor
Relations Commission is hereby MODIFIED by awarding

(a) in favor of petitioner Villuga, overtime pay, holiday pay, premium pay for holiday and rest day,
service incentive leave pay and separation pay, in addition to his 13th month pay; and

(b) in favor of the rest of the petitioners, their respective 13th month pay.

The case is hereby REMANDED to the National Labor Relations Commission for the computation of the
claims herein-above mentioned.

SO ORDERED.
 [G.R. No. 116960. April 2, 1996]

BERNARDO JIMENEZ and JOSE JIMENEZ, as Operators of JJs TRUCKING, petitioners,

vs. NATIONAL LABOR RELATIONS COMMISSION, PEDRO JUANATAS and
FREDELITO JUANATAS, respondents.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; FACTUAL FINDINGS OF THE NLRC, GENERALLY
RESPECTED; EXCEPT WHEN AT ODDS WITH THE LABOR ARBITER. - The review of
labor cases elevated to us on certiorari is confined to questions of jurisdiction or grave abuse of
discretion. As a rule, this Court does not review supposed errors in the decision of the NLRC which
raise factual issues, because factual findings of agencies exercising quasi-judicial functions are
accorded not only respect but even finality, aside from the consideration that the Court is essentially
not a trier of facts. However, in the case at bar, a review of the records thereof with an assessment of
the facts is necessary since the factual findings of the NLRC and the labor arbiter are at odds with
each other.
2. ID.; ID.; BURDEN OF PROOF; THE DEBTOR WHO PLEADS AFFIRMATIVE
ALLEGATION OF PAYMENT OF OBLIGATION MUST PROVE THE SAME; WHEN
THE BURDEN SHIFTS TO THE CREDITOR. - As a general rule, one who pleads payment has
the burden of proving it. Even where the plaintiff must allege non-payment, the general rule is that
the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-
payment. The debtor has the burden of showing with legal certainty that the obligation has been
discharged by payment. When the existence of a debt is fully established by the evidence contained
in the record, the burden of proving that it has been extinguished by payment devolves upon the
debtor who offers such a defense to the claim of the creditor. Where the debtor introduces some
evidence of payment, the burden of going forward with the evidence - as distinct from the general
burden of proof- shifts to the creditor, who is then under a duty of producing some evidence to show
non-payment. In the instant case, the right of respondent to be paid a commission is not disputed by
petitioners. Although private respondents admit receipt of partial payment, petitioners still have to
present proof of full payment. Where the defendant sued for a debt admits that the debt was
originally owed, and pleads payment in whole or in part, it is incumbent upon him to prove such
payment. That a plaintiff admits that some payments have been made does not change the burden of
proof. The defendant still has the burden of establishing payments beyond those admitted by
plaintiff. The positive testimony of a creditor may be sufficient of itself to show non-payment, even
when met by indefinite testimony of the debtor. Similarly, the testimony of the debtor may also be
sufficient to show payment, but, where his testimony is contradicted by the other party or by a
disinterested witness, the issue may be determined against the debtor since he has the burden of
proof. The testimony of the debtor creating merely an inference of payment will not be regarded as
conclusive on that issue. Hence, for failure to present evidence to prove payment, petitioners
defaulted in their defense and in effect admitted the allegations of private respondents.
3. ID.; ID.; RULES OF ADMISSIBILITY; DOCUMENTS NOT PROPERLY ACCOMPLISHED
HAS NO PROBATIVE VALUE. - The testimony of petitioners which merely denied the claim of
private respondents, unsupported by documentary evidence, is not sufficient to establish payment.
Although petitioners submitted a notebook showing the alleged vales of private respondents for the
year 1990, the same is inadmissible and cannot be given probative value considering that it is not
properly accomplished, is undated and unsigned, and is thus uncertain as to its origin and
authenticity.
4. LABOR LAW AND SOCIAL LEGISLATION; EMPLOYER-EMPLOYEE RELATIONSHIP;
ELEMENTS; NOT PRESENT IN CASE AT BAR. - In determining the existence of an employer-
employee relationship, the elements that are generally considered are the following: (1) the selection
and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
power to control the employees conduct, with the control test assuming primacy in the overall
consideration. In the case at bar, the aforementioned elements are not present.
APPEARANCES OF COUNSEL
Fernandez law Office for petitioners.
Alejandro M. Villamil for private respondents.

DECISION
REGALADO, J.:

This petition for certiorari seeks the annulment of the decision of respondent National Labor
Relations Commission (NLRC), dated May 27, 1994, as well as its resolution, dated August 8, 1994,
denying petitioners motion for reconsideration,1 which assailed decision affirmed with modifications the
adverse decision of the labor arbiter against herein petitioners.
On June 29, 1990, herein private respondents Pedro and Fredelito Juanatas, father and son, filed a
claim for unpaid wages/commissions, separation pay and damages against JJ s Trucking and/or Dr.
Bernardo Jimenez. Said respondents, as complainants therein, alleged that in December, 1987, they were
hired by herein petitioner Bernardo Jimenez as driver! mechanic and helper, respectively, in his trucking
firm, JJ Trucking. They were assigned to a ten-wheeler truck to haul soft drinks of Coca-Cola Bottling
Company and paid on commission basis, initially fixed at 17% but later increased to 20% in 1988.
Private respondents further alleged that for the years 1988 and 1989 they received only a partial
commission of P84,000.00 from petitioners total gross income of almost P1,000,000.00 for the said two
years. Consequently, with their commission for that period being computed at 20% of said income, there
was an unpaid balance to them of P106,211.86; that until March, 1990 when their services were illegally
terminated, they were further entitled to P15,050.309 which, excluding the partial payment of P7,000.00,
added up to a grand total of P114,261.86 due and payable to them; and that petitioners refusal to pay their
aforestated commission was a ploy to unjustly terminate them.
Disputing the complaint, petitioners contend that respondent Fredelito Juanatas was not an employee
of the firm but was merely a helper of his father Pedro; that all commissions for 1988 and 1989, as well as
those up to March, 1990, were duly paid; and that the truck driven by respondent Pedro Juanatas was sold
to one Winston Flores in 1991 and, therefore, private respondents were not illegally dismissed.2
After hearings duly conducted, and with the submission of the parties position/supporting papers,
Labor Arbiter Roque B. de Guzman rendered a decision dated March 9, 1993, with this decretal portion:

WHEREFORE, decision is hereby issued ordering respondents JJs Trucking and/or Dr. Bernardo Jimenez
to pay jointly and severally complainant Pedro Juanatas a separation pay of FIFTEEN THOUSAND
FIFTY (P15,050.00) PESOS, plus attorneys fee equivalent to ten percent (10%) of the award.

The complaint of Fredelito Juanatas is hereby dismissed for lack of merit.3

On appeal filed by private respondents, the NLRC modified the decision of the labor arbiter and
disposed as follows:
PREMISES CONSIDERED, the Decision of March 9, 1993 is hereby MODIFIED, to wit:

1. Complainant Fredelito Juanatas is hereby declared respondents employee and shares in (the)
commission and separation pay awarded to complainant Pedro Juanatas, his father.

2. Respondent JJs Trucking and Dr. Bernardo Jimenez are jointly and severally liable to pay complainants
their unpaid commissions in the total amount of Eighty Four Thousand Three Hundred Eighty Seven
Pesos and 05/100 (P84,387.05).

3. The award of attorneys fees is reduced accordingly to eight thousand four hundred thirty eight pesos
and 70/100 (P8,438.70).

4. The other findings stand affirmed.4

Petitioners motion for reconsideration having been denied thereafter in public respondents resolution
dated August 8, 1994,5 petitioners have come to us in this recourse, raising for resolution the issues as to
whether or not respondent NLRC committed grave abuse of discretion in ruling (a) that private
respondents were not paid their commissions in full, and (b) that respondent Fredelito Juanatas was an
employee of JJs Trucking.
The review of labor cases elevated to us on certiorari is confined to questions ofjurisdiction or grave
abuse of discretion.6 As a rule, this Court does not review supposed errors in the decision of the NLRC
which raise factual issues, because factual findings of agencies exercising quasi-judicial functions are
accorded not only respect but even finality,7 aside from the consideration that the Court is essentially not
a trier of facts. However, in the case at bar, a review of the records thereof with an assessment of the facts
is necessary since the factual findings of the NLRC and the labor arbiter are at odds with each other.8
On the first issue, we find no reason to disturb the findings of respondent NLRC that the entire
amount of commissions was not paid, this by reason of the evident failure of herein petitioners to present
evidence thatfull payment thereof has been made. It is a basic rule in evidence that each party must prove
his affirmative allegations. Since the burden of evidence lies with the party who asserts an affirmative
allegation, the plaintiff or complainant has to prove his affirmative allegation, in the complaint and the
defendant or respondent has to prove the affirmative allegations in his affirmative defenses and
counterclaim. Considering that petitioners herein assert that the disputed commissions have been paid,
they have the bounden duty to prove that fact.
As a general rule, one who pleads payment has the burden of proving it.9 Even where the plaintiff
must allege non-payment, the general rule is that the burden rests on the defendant to prove payment,
rather than on the plaintiff to prove non-payment.10 The debtor has the burden of showing with legal
certainty that the obligation has been discharged by payment.11
When the existence of a debt is fully established by the evidence contained in the record, the burden
of proving that it has been extinguished by payment devolves upon the debtor who offers such a defense
to the claim of the creditor.12 Where the debtor introduces some evidence of payment, the burden of going
forward with the evidence - as distinct from the general burden of proof - shifts to the creditor, who is
then under a duty of producing some evidence to show non-payment.13
In the instant case, the right of respondent Pedro Juanatas to be paid a commission equivalent to
17%, later increased to 20%, of the gross income is not disputed by petitioners. Although private
respondents admit receipt of partial payment, petitioners still have to present proof of full payment.
Where the defendant sued for a debt admits that the debt was originally owed, and pleads payment in
whole or in part, it is incumbent upon him to prove such payment. That a plaintiff admits that some
payments have been made does not change the burden of proof. The defendant still has the burden of
establishing payments beyond those admitted by plaintiff.14
The testimony of petitioners which merely denied the claim of private respondents, unsupported by
documentary evidence, is not sufficient to establish payment. Although petitioners submitted a notebook
showing the alleged vales of private respondents for the year 1990,15 the same is inadmissible and cannot
be given probative value considering that it is not properly accomplished, is undated and unsigned, and is
thus uncertain as to its origin and authenticity.16
The positive testimony of a creditor may be sufficient of itself to show non-payment, even when met
by indefinite testimony of the debtor. Similarly, the testimony of the debtor may also be sufficient to
show payment, but, where his testimony is contradicted by the other party or by a disinterested witness,
the issue may be determined against the debtor since he has the burden of proof. The testimony of the
debtor creating merely an inference of payment will not be regarded as conclusive on that issue.17
Hence, for failure to present evidence to prove payment, petitioners defaulted in their defense and in
effect admitted the allegations of private respondents.
With respect to the second issue, however, we agree with petitioners that the NLRC erred in holding
that the son, Fredelito, was an employee of petitioners.
We have consistently ruled that in determining the existence of an employer-employee relationship,
the elements that are generally considered are the following: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
employees conduct,18 with the control test assuming primacy in the overall consideration.
In the case at bar, the aforementioned elements are not present. The agreement was between
petitioner JJs Trucking and respondent Pedro Juanatas. The hiring of a helper was discretionary on the
part of Pedro. Under their contract, should he employ a helper, he would be responsible for the latters
compensation. With or without a helper, respondent Pedro Juanatas was entitled to the same percentage of
commission. Respondent Fredelito Juanatas was hired by his father, Pedro, and the compensation he
received was paid by his father out of the latters commission. Further, Fredelito was not subject to the
control and supervision of and dismissal by petitioners but of and by his father.
Even the Solicitor General, in his comment, agreed with the finding of the labor arbiter that Fredelito
was not an employee of petitioners, to wit:

Public respondent committed grave abuse of discretion in holding that said private respondent is an
employee of JJs Trucking on the ground that, citing Article 281 of the Labor Code, Fredelitos functions as
helper was (sic) necessary and desirable to respondents trucking business.

In the first place, Article 281 of the Labor Code does not refer to the basic factors that must underlie
every existing employer-employee relationship, the absence of any of which will negate such existence. It
refers instead to the qualifications of (A)n employee who is allowed to work after a probationary period
and who, as a consequence, shall be considered a regular employee. Secondly, the test in determining the
existence of an employee-employer relationship is not the necessity and/or desirability of ones functions
in relation to an employers business, but (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct. The
latter is the most important element (Singer Sewing Machine Company vs. Drilon, 193 SCRA 270, 275;
Deferia vs. NLRC, 194 SCRA 531, 525; Ecal vs. NLRC, 224, 228; Hijos De F. Escano, Inc. vs. NLRC,
224 SCRA 781, 785). The aforequoted pertinent findings of the Labor Arbiter indicate (that) the
foregoing requirements do not exist between petitioner and private respondent Fredelito Juanatas. Thus,
the labor arbiter stated that respondent Fredelito Juanatas was never hired by petitioners. Instead the
formers services were availed of by respondent Pedro Juanatas his father, who, at the same time,
supervised and controlled his work and paid his commissions. Respondent NLRCs ruling did not traverse
these findings of the labor arbiter.19

WHEREFORE, the judgment of respondent National Labor Relations Commission is hereby

AFFIRMED, with the MODIFICATION that paragraph 1 thereof, declaring Fredelito Juanatas an
employee of petitioners and entitled to share in the award for commission and separation pay, is hereby
DELETED.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 114787 June 2, 1995

MAM REALTY DEVELOPMENT CORPORATION and MANUEL CENTENO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and CELSO B. BALBASTRO respondents.

VITUG, J.:

A prime focus in the instant petition is the question of when to hold a director or officer of a corporation
solidarily obligated with the latter for a corporate liability.

The case originated from a complaint filed with the Labor Arbiter by private respondent Celso B.
Balbastro against herein petitioners, MAM Realty Development Corporation ("MAM") and its Vice
President Manuel P. Centeno, for wage differentials, "ECOLA," overtime pay, incentive leave pay,
13th month pay (for the years 1988 and 1989), holiday pay and rest day pay. Balbastro alleged that he
was employed by MAM as a pump operator in 1982 and had since performed such work at its Rancho
Estate, Marikina, Metro Manila. He earned a basic monthly salary of P1,590.00 for seven days of work a
week that started from 6:00 a.m. to up until 6:00 p.m. daily.

MAM countered that Balbastro had previously been employed by Francisco Cacho and Co., Inc., the
developer of Rancho Estates. Sometime in May 1982, his services were contracted by MAM for the
operation of the Rancho Estates' water pump. He was engaged, however, not as an employee, but as a
service contractor, at an agreed fee of P1,590.00 a month. Similar arrangements were likewise entered
into by MAM with one Rodolfo Mercado and with a security guard of Rancho Estates III Homeowners'
Association. Under the agreement, Balbastro was merely made to open and close on a daily basis the
water supply system of the different phases of the subdivision in accordance with its water rationing
scheme. He worked for only a maximum period of three hours a day, and he made use of his free time by
offering plumbing services to the residents of the subdivision. He was not at all subject to the control or
supervision of MAM for, in fact, his work could so also be done either by Mercado or by the security
guard. On 23 May 1990, prior to the filing of the complaint, MAM executed a Deed of
Transfer, 1effective 01 July 1990, in favor of the Rancho Estates Phase III Homeowners Association, Inc.,
conveying to the latter all its rights and interests over the water system in the subdivision.

In a decision, dated 23 December 1991, the Labor Arbiter dismissed the complaint for lack of merit.

On appeal to it, respondent National Labor Relations Commission ("NLRC") rendered judgment (a)
setting aside the questioned decision of the Labor Arbiter and (b) referring the case, pursuant to Article
218(c) of the Labor Code, to Arbiter Cristeta D. Tamayo for further hearing and submission of a report
within 20 days from receipt of the Order. 2 On 21 March 1994, respondent Commissioner, after
considering the report of Labor Arbiter Tamayo, ordered:
 WHEREFORE, the respondents are hereby directed to pay jointly and severally
complainant the sum of P86,641.05 as above-computed. 3

The instant petition asseverates that respondent NLRC gravely abused its discretion, amounting
to lack or excess of jurisdiction, (1) in finding that an employer-employee relationship existed
between petitioners and private respondent and (2) in holding petitioners jointly and severally
liable for the money claims awarded to private respondent.

Once again, the matter of ascertaining the existence of an employer-employee relationship is raised.
Repeatedly, we have said that this factual issue is determined by:

(a) the selection and engagement of the employee;

(b) the payment of wages;

(c) the power of dismissal; and

(d) the employer's power to control the employee with respect to the result of the work to
be done and to the means and methods by which the work is to be accomplished.

We see no grave abuse of discretion on the part of NLRC in finding a full satisfaction, in the case
at bench, of the criteria to establish that employer-employee relationship. The power of control,
the most important feature of that relationship and, here, a point of controversy, refers merely to
the existence of the power and not to the actual exercise thereof. It is not essential for the
employer to actually supervise the performance of duties of the employee; it is enough that the
former has a right to wield the power. 4 It is hard to accede to the contention of petitioners that
private respondent should be considered totally free from such control merely because the work
could equally and easily be done either by Mercado or by the subdivision's security guard. Not
without any significance is that private respondent's employment with MAM has been registered
by petitioners with the Social Security System. 5

It would seem that the money claims awarded to private respondent were computed from 06 March 1988
to 06 March 1991, 6 the latter being the date of the filing of the complaint. The NLRC might have missed
the transfer by MAM of the water system to the Homeowners Association on 01 July 1990, a matter that
would appear not to be in dispute. Accordingly, the period for the computation of the money claims
should only be for the period from 06 March 1988 to 01 July 1990 (when petitioner corporation could be
deemed to have ceased from the activity for which private respondent was employed), and petitioner
corporation should, instead, be made liable for the employee's separation pay equivalent to one-half (1/2)
month pay for every year of
service. 7 While the transfer was allegedly due to MAM's financial constraints, unfortunately for
petitioner corporation, however, it failed to sufficiently establish that its business losses or financial
reverses were serious enough that possibly can warrant an exemption under the law. 8

We agree with petitioners, however, that the NLRC erred in holding Centeno jointly and severally liable
with MAM. A corporation, being a juridical entity, may act only through its directors, officers and
employees. Obligations incurred by them, acting as such corporate agents, are not theirs but the direct
accountabilities of the corporation they represent. True, solidary liabilities may at times be incurred but
only when exceptional circumstances warrant such as, generally, in the following cases: 9

1. When directors and trustees or, in appropriate cases, the officers of a corporation
 (a) vote for or assent to patently unlawful acts of the corporation;

(b) act in bad faith or with gross negligence in directing the corporate
affairs;

(c) are guilty of conflict of interest to the prejudice of the corporation, its
stockholders or members, and other persons. 10

2. When a director or officer has consented to the issuance of watered stocks or who,
having knowledge thereof, did not forthwith file with the corporate secretary his written
objection thereto. 11

3. When a director, trustee or officer has contractually agreed or stipulated to hold

himself personally and solidarily liable with the Corporation. 12

4 When a director, trustee or officer is made, by specific provision of law, personally

liable for his corporate action. 13

In labor cases, for instance, the Court has held corporate directors and officers solidarily liable
with the corporation for the termination of employment of employees done with malice or in bad
faith. 14

In the case at Bench, there is nothing substantial on record that can justify, prescinding from the
foregoing, petitioner Centeno's solidary liability with the corporation.

An extra note. Private respondent avers that the questioned decision, having already become final and
executory, could no longer be reviewed by this Court. The petition before us has been filed under Rule 65
of the Rules of Court, there being no appeal, or any other plain, speedy and adequate remedy in the
ordinary course of law from decisions of the National Labor Relations Commission; it is a relief that is
open so long as it is availed of within a reasonable time.

WHEREFORE, the order of 21 March 1994 is MODIFIED. The case is REMANDED to the NLRC for a
re-computation of private respondent's monetary awards, which, conformably with this opinion, shall be
paid solely by petitioner MAM Realty Development Corporation. No special pronouncement on costs.

SO ORDERED.
 FIRST DIVISION

[G.R. No. 119930. March 12, 1998]

INSULAR LIFE ASSURANCE CO., LTD., petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION (Fourth Division, Cebu City), LABOR ARBITER NICASIO P. ANINON
and PANTALEON DE LOS REYES, respondents.

DECISION
BELLOSILLO, J.:

On 17 June 1994 respondent Labor Arbiter dismissed for lack of jurisdiction NLRC RAB-VII Case
No. 03-0309-94 filed by private respondent Pantaleon de los Reyes against petitioner Insular Life
Assurance Co., Ltd. (INSULAR LIFE), for illegal dismissal and nonpayment of salaries and back wages
after findings no employer-employee relationship between De los Reyes and petitioner INSULAR
LIFE.[1] On appeal by private respondent, the order of dismissal was reversed by the National Labor
Relations Commission (NLRC) which ruled that respondent De los Reyes was an employee of
petitioner.[2] Petitioners motion for reconsideration having been denied, the NLRC remanded the case to
the Labor Arbiter for hearing on the merits.
Seeking relief through this special civil action for certiorari with prayer for a restraining order and/or
preliminary injunction, petitioner now comes to us praying for annulment of the decision of respondent
NLRC dated 3 March 1995 and its Order dated 6 April 1995 denying the motion for reconsideration of
the decision. It faults NLRC for acting without jurisdiction and/or with grave abuse of discretion when,
contrary to established facts and pertinent law and jurisprudence, it reversed the decision of the Labor
Arbiter and held instead that the complaint was properly filed as an employer-employee relationship
existed between petitioner and private respondent.
Petitioner reprises the stand it assumed below that it never had any employer-employee relationship
with private respondent, this being an express agreement between them in the agency contracts,
particularly reinforced by the stipulation therein de los Reyes was allowed discretion to devise ways and
means to fulfill his obligations as agent and would be paid commission fees based on his actual output. It
further insists that the nature of this work status as described in the contracts had already been squarely
resolved by the Court in the earlier case of Insular Life Assurance Co., Ltd. v. NLRC and Basiao [3]where
the complainant therein, Melecio Basiao, was similarly situated as respondent De los Reyes in that he was
appointed first as an agent and then promoted as agency manager, and the contracts under which he was
appointed contained terms and conditions Identical to those of De los Reyes. Petitioner concludes that
since Basiao was declared by the Court to be an independent contractor and not an employee of petitioner,
there should be no reason why the status of De los Reyes herein vis--vis petitioner should not be similarly
determined.
We reject the submissions of petitioner and hold that respondent NLRC acted appropriately within
the bounds of the law. The records of the case are replete with telltale indicators of an existing employer-
employee relationship between the two parties despite written contractual disavowals.
These facts are undisputed: on 21 August 1992 petitioner entered into an agency contract with
respondent Pantaleon de los Reyes[4]authorizing the latter to solicit within the Philippines applications for
life insurance and annuities for which he would be paid compensation in the form of commissions. The
contract was prepared by petitioner in its entirety and De los Reyes merely signed his conformity thereto.
It contained the stipulation that no employer-employee relationship shall be created between the parties
and that the agent shall be free to exercise his own judgment as to time, place and means of soliciting
insurance. De los Reyes however was prohibited by petitioner from working for any other life insurance
company, and violation of this stipulation was sufficient ground for termination of the contract. Aside
from soliciting insurance for the petitioner, private respondent was required to submit to the former all
completed applications for insurance within ninety (90) consecutive days, deliver policies, receive and
collect initial premiums and balances of first year premiums, renewal premiums, deposits on applications
and payments on policy loans. Private respondent was also bound to turn over to the company
immediately any and all sums of money collected by him. In a written communication by petitioner to
respondent De los Reyes, the latter was urged to register with the Social Security System as a self-
employed individual as provided under PD No. 1636.[5]
On 1 March 1993 petitioner and private respondent entered into another contract [6]where the latter
was appointed as Acting Unit Manager under its office the Cebu DSO V (157). As such, the duties and
responsibilities of De los Reyes included the recruitment, training, organization and development within
his designated territory of a sufficient number of qualified, competent and trustworthy underwriters, and
to supervise and coordinate the sales efforts of the underwriters in the active solicitation of new business
and in the furtherance of the agencys assigned goals. It was similarly provIded in the management
contract that the relation of the acting unit manager and/or the agents of his unit to the company shall be
that of independent contractor. If the appointment was terminated for any reason other than for cause, the
acting unit manager would be reverted to agent status and assigned to any unit. As in the previous agency
contract, De los Reyes together with his unit force was granted freedom to exercise judgment as to time,
place and means of soliciting insurance. Aside from being granted override commissions, the acting unit
manager was given production bonus, development allowance and a unit development financing scheme
euphemistically termed financial assistance consisting of payment to him of a free portion of P300.00 per
month and a valIdate portion of P1,200.00. While the latter amount was deemed as an advance against
expected commissions, the former was not and would be freely given to the unit manager by the company
only upon fulfillment by him of certain manpower and premium quota requirements. The agents and
underwriters recruited and trained by the acting unit manager would be attached to the unit but petitioner
reserved the right to determine if such assignment would be made or, for any reason, to reassign them
elsewhere.
Aside from soliciting insurance, De los Reyes was also expressly obliged to participate in the
companys conservation program, i.e., preservation and maintenance of existing insurance policies, and to
accept moneys duly receipted on agents receipts provided the same were turned over to the company. As
long as he was unit manager in an acting capacity, De los Reyes was prohibited from working for other
life insurance companies or with the government. He could not also accept a managerial or supervisory
position in any firm doing business in the Philippines without the written consent of petitioner.
Private respondent worked concurrently as agent and Acting Unit Manager until he was notified by
petitioner on 18 November 1993 that his services were terminated effective 18 December 1993. On 7
March 1994 he filed a complaint before the Labor Arbiter on the ground that he was illegally dismissed
and that he was not paid his salaries and separation pay.
Petitioner filed a motion to dismiss the complaint of De los Reyes for lack of jurisdiction, citing the
absence of employer-employee relationship. it reasoned out that based on the criteria for determining the
existence of such relationship or the so-called four-fold test, i.e., (a) selection and engagement of
employee, (b) payment of wages, (c) power of dismissal, and, (d) power of control, De los Reyes was not
an employee but an independent contractor.
On 17 June 1994 the motion of petitioner was granted by the Labor Arbiter and the case was
dismissed on the ground that the element of control was not sufficiently established since the rules and
guidelines set by petitioner in its agency agreement with respondent De los Reyes were formulated only to
achieve the desired result without dictating the means or methods of attaining it.
Respondent NLRC however appreciated the evidence from a different perspective. It determined that
respondent De los Reyes was under the effective control of petitioner in the critical and most important
aspects of his work as Unit Manager. This conclusion was derived from the provisions in the contract
which appointed private respondent as Acting Unit Manager, to wit: (a) De los Reyes was to serve
exclusively the company, therefore, he was not an independent contractor; (b) he was required to meet
certain manpower and production quota; and, (c) petitioner controlled the assignment to and removal of
soliciting agents from his unit.
The NLRC also took into account other circumstances showing that petitioner exercised employers
prerogatives over De los Reyes, e.g., (a) limiting the work of respondent De los Reyes to selling a life
insurance policy known as Salary Deduction Insurance only to members of the Philippine National Police,
public and private school teachers and other employees of private companies; (b) assigning private
respondent to a particular place and table where he worked whenever he has not in the field; (c) paying
private respondent during the period of twelve (12) months of his appointment as Acting Unit Manager
the amount of P1,500.00 as Unit Development Financing of which 20% formed his salary and the rest,
i.e., 80%, as advance of his expected commissions; and (d) promising that upon completion of certain
requirements, he would be promoted to Unit Manager with the right of petitioner to revert him to agent
status when warranted.
Parenthetically, both petitioner and respondent NLRC treated the agency contract and the
management contract entered into between petitioner and De los Reyes as contracts of agency. We
however hold otherwise. Unquestionably there exist major distinctions between the two agreements.
While the first has the earmarks of an agency contract, the second is far removed from the concept of
agency in that provided therein are conditionalities that indicate an employer-employee relationship. the
NLRC therefore was correct in finding that private respondent was an employee of petitioner, but this
holds true only insofar as the management contract is concerned. In view thereof, he Labor Arbiter has
jurisdiction over the case.
It is axiomatic that the existence of an employer-employee relationship cannot be negated by
expressly repudiating it in the management contract and providing therein that the employee is an
independent contractor when the terms of agreement clearly show otherwise. For, the employment status
of a person is defined and prescribed by law and not by what the parties say it should be.[7] In determining
the status of the management contract, the four-fold test on employment earlier mentioned has to be
applied.
Petitioner contends that De los Reyes was never required to go through the pre-employment
procedures and that the probationary employment status was reserved only to employees of petitioner. On
this score, it insists that the first requirement of selection and engagement of the employee was not met.
A look at the provisions of the contract shows that private respondent was appointed as Acting Unit
Manager only upon recommendation of the District Manager.[8] This indicates that private respondent was
hired by petitioner because of the favorable endorsement of its duly authorized officer. But, this
approbation could only have been based on the performance of De los Reyes with petitioner was nothing
more than a trial or probationary period for his eventual appointment as Acting Unit Manager of
petitioner. Then, again, the very designation of the appointment of private respondent as acting unit
manager obviously implies a temporary employment status which may be made permanent only upon
compliance with company standards such as those enumerated under Sec. 6 of the management
contract.[9]
 On the matter of payment of wages, petitioner points out that respondent was compensated strictly
on commission basis, the amount of which was totally dependent on his total output. But, the managers
contract speaks differently. Thus
4. Performance Requirements.- To maintain your appointment as Acting Unit Manager you
must meet the following manpower and production requirements:

Quarter Active Calendar Year

Production Agents Cumulative FYP
Production

1ST 2 P125,000
2ND 3 250,000
3RD 4 375,000
4TH 5 500,000

5.4 Unit Development Financing (UDF). As an Acting Unit Manager you shall be given
during the first 12 months of your appointment a financial assistance which is composed of two
parts:

5.4.1 Free Portion amounting to P300 per month, subject to your meeting prescribed
minimum performance requirement on manpower and premium production. The free portion is
not payable by you.

5.4.2 Validate Portion amounting to P1,200 per month, also subject to meeting the
same prescribed minimum performance requirements on manpower and premium production.
The valIdated portion is an advance against expected compensation during the UDF period
and thereafter as may be necessary.

The above provisions unquestionably demonstrate that the performance requirement imposed on De
los Reyes was applicable quarterlywhile his entitlement to the free portion (P300) and the validated
portion (P1,200) was monthly starting on the first month of the twelve (12) months of the appointment.
Thus, it has to be admitted that even before the end of the first quarter and prior to the so-called quarterly
performance evaluation, private respondent was already entitled to be paid both the free and validated
portions of the UDF every month because his production performance could not be determined until after
the lapse of the quarter involved. This indicates quite clearly that the unit managers quarterly performance
had no bearing at all on his entitlement at least to the free portion of the UDF which for all intents and
purposes comprised the salary regularly paid to him by petitioner. Thus it cannot be validly claimed that
the financial assistance consisting of the free portion of the UDF was purely dependent on the premium
production of the agent. Be that as it may, it is worth considering that the payment of compensation by
way of commission does not militate against the conclusion that private respondent was an employee of
petitioner. Under Art. 97 of the Labor Code, wage shall mean however designated, capable of being
expressed in terms of money, whether fixed or ascertained on a time, task, price or commission basis x x
x x [10]
As to the matter involving the power of dismissal and control by the employer, the latter of which is
the most important of the test, petitioner asserts that its termination of De los Reyes was but an exercise of
its inherent right as principal under the contracts and that the rules and guIdelines it set forth in the
contract cannot, by any stretch of imagination, be deemed as an exercise of control over the private
respondent as these were merely directives that fixed the desired result without dictating the means or
method to be employed in attaining it. The following factual findings of the NLRC [11] however contradict
such claims:

A perusal of the appointment of complainant as Acting Unit Manager reveals that:

1. Complainant was to exclusively serve respondent company. Thus it is provIded: x x x 7..7

Other causes of Termination: This Appointment may likewise be terminated for any of the
following causes: x x x 7..7..2. Your entering the service of the government or another life
insurance company; 7..7..3. Your accepting a managerial or supervisory position in any firm doing
business in the Philippines without the written consent of the Company; x x x

2. Complainant was required to meet certain manpower and production quotas.

3. Respondent (herein petitioner) controlled the assignment and removal of soliciting agents
to and from complainants unit, thus: x x x 7..2. Assignment of Agents: Agents recruited and trained
by you shall be attached to your unit unless for reasons of Company policy, no such assignment
should be made. The Company retains the exclusive right to assign new soliciting agents appointed
and assigned to the saId unit x x x x

It would not be amiss to state the respondents duty to collect the companys premiums using company
receipts under Sec. 7.4 of the management contract is further evIdence of petitioners control over
respondent, thus:
xxxx

7.4 Acceptance and Remittance of Premiums. x x x x the Company hereby authorizes you to accept and
receive sums of money in payment of premiums, loans, deposits on applications, with or without interest,
due from policy holders and applicants for insurance, and the like, specially from policyholders of
business solicited and sold by the agents attached to your unit provIded however, that all such payments
shall be duly receipted by you on the corresponding Companys Agents Receipt to be provIded you for
this purpose and to be covered by such rules and accounting regulations the Company may issue from
time to time on the matter. Payments received by you shall be turned over to the Companys designated
District or Service Office clerk or directly to the Home Office not later than the next working day from
receipt thereof x x x x

Petitioner would have us apply our ruling in Insular Life Assurance Co., Ltd. v. NLRC and
Basiao [12] to the instant case under the doctrine of stare decisis, postulating that both cases involve
parties similarly situated and facts which are almost Identical.
But we are not convinced that the cited case is on all fours with the case at bar. In Basiao, the agent
was appointed Agency Manager under an Agency Manager Contract. To implement his end of the
agreement, Melecio Basiao organized an agency office to which he gave the name M. Basiao and
Associates. The Agency Manager Contract practically contained the same terms and conditions as the
Agency Contract earlier entered into, and the Court observed that drawn from the terms of the contract
they had entered into, (which) either expressly or by necessary implication, Basiao (was) made the master
of his own time and selling methods, left to his own judgment the time, place and means of soliciting
insurance, set no accomplishment quotas and compensated him on the bases of results obtained. He was
not bound to observe any schedule of working hours or report to any regular station; he could seek and
work on his prospects anywhere and anytime he chose to and was free to adopt the selling methods he
deemed most effective. Upon these premises, Basiao was considered as agent an independent contractor
of petitioner INSULAR LIFE.
 Unlike Basiao, herein respondent De los Reyes was appointed Acting Unit Manager, not agency
manager. There is not evidence that to implement his obligations under the management contract, De los
Reyes had organized an office. Petitioner in fact has admitted that it provIded De los Reyes a place and a
table at its office where he reported for and worked whenever he was not out in the field. Placed under
petitioners Cebu District Service Office, the unit was given a name by petitioner De los Reyes and
Associates and assigned Code No. 11753 and Recruitment No. 109398. Under the managership contract,
De los Reyes was obliged to work exclusively for petitioner in life insurance solicitation and was imposed
premium production quotas. Of course, the acting unit manager could not underwrite other lines of
insurance because his Permanent Certificate of Authority was for life insurance only and for no other. He
was proscribed from accepting a managerial or supervisory position in any other office including the
government without the written consent of petitioner. De los Reyes could only be promoted to permanent
unit manager if he met certain requirements and his promotion was recommended by the petitioners
District Manager and Regional Manager and approved by its Division Manager. As Acting Unit Manager,
De los Reyes performed functions beyond mere solicitation of insurance business for petitioner. As found
by the NLRC, he exercised administrative functions which were necessary and beneficial to the business
of INSULAR LIFE.
In Great Pacific Life Insurance Company v. NLRC[13] which is closer in application that Basiao to
this present controversy, we found that the relationships of the Ruiz brothers and Grepalife were those of
employer-employee. First, their work at the time of their dismissal as zone supervisor and district
manager was necessary and desirable to the usual business of the insurance company. They were
entrusted with supervisory, sales and other functions to guard Grepalifes business interests and to bring in
more clients to the company, and even with administrative functions to ensure that all collections, reports
and data are faithfully brought to the company x x x x A cursory reading of their respective functions as
enumerated in their contracts reveals that the company practically dictates the manner by which their jobs
are to be carried out x x x x We need elaborate no further.
Exclusivity of service, control of assignments and removal of agents under private respondents unit,
collection of premiums, furnishing of company facilities and materials as well as capital described as Unit
Development Fund are but hallmarks of the management system in which herein private respondent
worked. This obtaining, there is no escaping the conclusion that private respondent Pantaleon de los
Reyes was an employee of herein petitioner.
WHEREFORE, the petition of Insular Life Assurance Company, Ltd., is DENIED and the Decision
of the National Labor Relations Commission dated 3 March 1995 and its Order of 6 April 1996 sustaining
it are AFFIRMED. Let this case be REMANDED to the Labor Arbiter a quo who is directed to hear and
dispose of this case with deliberate dispatch in light of the views expressed herein.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 178909 October 10, 2012

SUPERIOR PACKAGING CORPORATION, Petitioner,

vs.
ARNEL BALAGSA Y, ZALDY ALFORGNE, JAIME ANGELES, REY APURA, GERALD
CABALAN, JONALD CALENTENG, RAMIL CROIJERO, JUNREY CABALGUINTO, OSCAR
DAYTO, RUFO DIONOLA, DIONILO ESMERALDA, BOOTS LADRILLO, ELIEZER
MAGHAMOY, LEO FLORES, RENATOPAGADORA,REYNALDO PLAZA, H.OGER
SJBNEAO, EDWIN TONALBA, .JOHN ACHARON, RODERICK RAMAS, SALVADOR
ACURATO, JULUIS BASUL, CARLOS RAYTA, LITO BELANO, ROGER CASIMIRO, RENE
CURADA, NESTRO ESTE, ROMMEL IMPELIOO, ZOILO ISLA, JHONIE OGARDO, EDWIN
POSADAS, ALEXANDER REGPALA, CHRISTOPHER SAMPIANO, RITCHIE SANCHES,
ROLANDO SORIANO, ROWELL ANCHETA, RICKY BORDAS, ANTONIO BEHEN, RONALD
DOMINGO, JERRY MORENO, ROLLY ROSALES, RENATO RESTANO and ISIDRO
SARIGNE, Respondents.

RESOLUTION

REYES, J.:

The main issue in this case is whether Superior Packaging Corporation (petitioner) may be held solidarily
liable with Lancer Staffing & Services Network, Inc. (Lancer) for respondents unpaid money claims.

The facts are undisputed.

The petitioner engaged the services of Lancer to provide reliever services to its business, which involves
the manufacture and sale of commercial and industrial corrugated boxes. According to petitioner, the
respondents were engaged for four (4) months from February to June 1998 and their tasks included
loading, unloading and segregation of corrugated boxes.

Pursuant to a complaint filed by the respondents against the petitioner and its President, Cesar Luz (Luz),
for underpayment of wages, non-payment of premium pay for worked rest, overtime pay and non-
payment of salary, the Department of Labor and Employment (DOLE) conducted an inspection of the
petitioners premises and found several violations, to wit: (1) non-presentation of payrolls and daily time
records; (2) non-submission of annual report of safety organization; (3) medical and accident/illness
reports; (4) non-registration of establishment under Rule 1020 of Occupational and Health Standards; and
(5) no trained first aide1 Due to the petitioners failure to appear in the summary investigations conducted
by the DOLE, an Order2 was issued on June 18, 2003 finding in favor of the respondents and adopting the
computation of the claims submitted. Petitioner and Luz were ordered, among others, to pay respondents
their total claims in the amount of Eight Hundred Forty Thousand Four Hundred Sixty-Three Pesos and
38/100 (P 840,463.38).3

They filed a motion for reconsideration on the ground that respondents are not its employees but of
Lancer and that they pay Lancer in lump sum for the services rendered. The DOLE, however, denied its
motion in its Resolution4 dated February 16, 2004, ruling that the petitioner failed to support its claim that
the respondents are not its employees, and even assuming that they were employed by Lancer, the
petitioner still cannot escape liability as Section 13 of the Department Order No. 10, Series of 1997,
makes a principal jointly and severally liable with the contractor to contractual employees to the extent of
the work performed when the contractor fails to pay its employees wages.

Their appeal to the Secretary of DOLE was dismissed per Order5 dated July 30, 2004 and the Order dated
June 18, 2003 and Resolution dated February 16, 2004 were affirmed.6 Their motion for reconsideration
likewise having been dismissed by the Secretary of DOLE in an Order dated January 21, 2005,7 petitioner
and Luz filed a petition for certiorari with the Court of Appeals (CA).

On November 17, 2006, the CA affirmed the Secretary of DOLEs orders, with the modification in that
Luz was absolved of any personal liability under the award.8 The petitioner filed a partial motion for
reconsideration insofar as the finding of solidary liability with Lancer is concerned but it was denied by
the CA in a Resolution9 dated July 10, 2007.

The petitioner is now before the Court on petition for review under Rule 45 of the Rules of Court,
alleging that:

THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION IN
AFFIRMING THE RULING OF THE SECRETARY OF LABOR AND EMPLOYMENT THAT THE
COMPANY IS SOLIDARILY LIABLE WITH THE CONTRACTOR NOTWITHSTANDING THE
FACT THAT:

A. THE COMPANY CANNOT BE HELD SOLIDARILY LIABLE WITH THE

CONTRACTOR FOR THE PENALTY OR SANCTION IMPOSED BY WAY OF "DOUBLE
INDEMNITY" UNDER REPUBLIC ACT NO. 6727.

B. THERE IS NO EVIDENCE TO SHOW THAT PRIVATE RESPONDENTS RENDERED

OVERTIME WORK AND ACTUALLY WORKED ON THEIR RESTDAYS FOR THE
COMPANY FOR THE PERIOD IN QUESTION.

II

THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION IN
AFFIRMING THE FINDINGS OF THE SECRETARY OF LABOR AND EMPLOYMENT THAT THE
CONTRACTOR IS ENGAGED IN LABOR-ONLY CONTRACTING.10

On the first ground, the petitioner argues that the DOLE erred in doubling respondents underpayment of
wages and regular holiday pay under Republic Act No. 6727 (Wage Rationalization Act) inasmuch as the
solidary liability of a principal does not extend to a punitive award against a contractor.11 The petitioner
also contends that there is no evidence showing that the respondents rendered overtime work and that they
actually worked on their rest days for them to be entitled to such pay.12

On the second ground, the petitioner objects to the finding that it is engaged in labor-only contracting and
is consequently an indirect employer, considering that it is beyond the visitorial and enforcement power
of the DOLE to make such conclusion. According to the petitioner, such
conclusion may be made only upon consideration of evidentiary matters and cannot be determined solely
through a labor inspection.13 The petitioner also refutes respondents alleged belated argument that the
latter are its employees.14

The petition is bereft of merit.

To begin with, the Court will not resolve or dwell on the petitioners argument on the doubling of
respondents underpayment of wages and regular holiday pay by the DOLE for the simple reason that this
is the first time that the petitioner raised such contention. From its pleadings filed in the DOLE and all the
way up to the CA, the petitioner never questioned nor discussed such issue. It is only now before the
Court that the petitioner belatedly presented such argument. It is well-settled that points of law, theories,
issues and arguments not brought to the attention of the lower court, administrative agency or quasi-
judicial body need not be considered by a reviewing court, as they cannot be raised for the first time at
that late stage.15 To consider the alleged facts and arguments raised belatedly would amount to trampling
on the basic principles of fair play, justice and due process.16

With regard to the contention that there is no evidence to support the finding that the respondents
rendered overtime work and that they worked on their rest day, the resolution of this argument requires a
review of the factual findings and the evidence presented, which this Court will not do. This Court is not a
trier of facts and this applies with greater force in labor cases.17 Hence, where the factual findings of the
labor tribunals or agencies conform to, and are affirmed by, the CA, the same are accorded respect and
finality, and are binding upon this Court.18

Petitioner also questions the authority of the DOLE to make a finding of an employer-employee
relationship concomitant to its visitorial and enforcement power. The Court notes at this juncture that the
petitioner, again, did not raise this question in the proceedings before the DOLE. At best, what the
petitioner raised was the sufficiency of evidence proving the existence of an employer-employee
relationship and it was only in its petition for certiorari with the CA that the petitioner sought to have this
matter addressed. The CA should have refrained from resolving said matter as the petitioner was deemed
to have waived such argument and was estopped from raising the same.19

At any rate, such argument lacks merit. The DOLE clearly acted within its authority when it determined
the existence of an employer-employee relationship between the petitioner and respondents as it falls
within the purview of its visitorial and enforcement power under Article 128(b) of the Labor Code, which
provides:

Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where
the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue compliance orders to give effect to the labor
standards provisions of this Code and other labor legislation based on the findings of labor employment
and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or
his duly authorized representative shall issue writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the employer contests the findings of the labor
employment and enforcement officer and raises issues supported by documentary proofs which were not
considered in the course of inspection.

In Peoples Broadcasting (Bombo Radyo Phils., Inc.) v. Secretary of the Department of Labor and
Employment,20the Court stated that it can be assumed that the DOLE in the exercise of its visitorial and
enforcement power somehow has to make a determination of the existence of an employer-employee
relationship. Such determination, however, is merely preliminary, incidental and collateral to the DOLEs
primary function of enforcing labor standards provisions. Such power was further explained recently by
the Court in its Resolution21 dated March 6, 2012 issued in Peoples Broadcasting, viz:

The determination of the existence of an employer-employee relationship by the DOLE must be

respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would be
rendered nugatory if the alleged employer could, by the simple expedient of disputing the employer-
employee relationship, force the referral of the matter to the NLRC. The Court issued the declaration that
at least a prima facie showing of the absence of an employer-employee relationship be made to oust the
DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that evidence, and it is the
DOLE that will weigh it, to see if the same does successfully refute the existence of an employer-
employee relationship.

xxxx

x x x The power of the DOLE to determine the existence of an employer-employee relationship need not
necessarily result in an affirmative finding.1wphi1 The DOLE may well make the determination that no
employer-employee relationship exists, thus divesting itself of jurisdiction over the case. It must not be
precluded from being able to reach its own conclusions, not by the parties, and certainly not by this Court.

Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to make a
determination as to the existence of an employer-employee relationship in the exercise of its visitorial and
enforcement power, subject to judicial review, not review by the NLRC.22

Also, the existence of an employer-employee relationship is ultimately a question of fact.23 The

determination made in this case by the DOLE, albeit provisional, and as affirmed by the Secretary of
DOLE and the CA is beyond the ambit of a petition for review on certiorari.24

The Court now comes to the issue regarding the nature of the relationship between the petitioner and
respondents, and the consequent liability of the petitioner to the respondents under the latters claim.

It was the consistent conclusion of the DOLE and the CA that Lancer was not an independent contractor
but was engaged in "labor-only contracting"; hence, the petitioner was considered an indirect employer of
respondents and liable to the latter for their unpaid money claims.

At the time of the respondents employment in 1998, the applicable regulation was DOLE Department
Order No. 10, Series of 1997.25 Under said Department Order, labor-only contracting was defined as
follows:

Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall
be deemed to be engaged in labor-only contracting where such person:

(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work
premises and other materials; and

(2) The workers recruited and placed by such persons are performing activities which are directly related
to the principal business or operations of the employer in which workers are habitually employed.
Labor-only contracting is prohibited and the person acting as contractor shall be considered merely as an
agent or intermediary of the employer who shall be responsible to the workers in the same manner and
extent as if the latter were directly employed by him.26

According to the CA, the totality of the facts and surrounding circumstances of this case point to such
conclusion. The Court agrees.

The ratio of Lancers authorized capital stock of P 400,000.00 as against its subscribed and paid-up
capital stock of P 25,000.00 shows the inadequacy of its capital investment necessary to maintain its day-
to-day operations. And while the Court does not set an absolute figure for what it considers substantial
capital for an independent job contractor, it measures the same against the type of work which the
contractor is obligated to perform for the principal.27 Moreover, the nature of respondents work was
directly related to the petitioners business. The marked disparity between the petitioners actual
capitalization (P 25,000.00) and the resources needed to maintain its business, i.e., "to establish, operate
and manage a personnel service company which will conduct and undertake services for the use of
offices, stores, commercial and industrial services of all kinds," supports the finding that Lancer was,
indeed, a labor-only contractor. Aside from these is the undisputed fact that the petitioner failed to
produce any written service contract that might serve as proof of its alleged agreement with Lancer.28

Finally, a finding that a contractor is a "labor-only" contractor is equivalent to declaring that there is an
employer-employee relationship between the principal and the employees of the supposed contractor, and
the "labor only" contractor is considered as a mere agent of the principal, the real employer.29 The former
becomes solidarily liable for all the rightful claims of the employees.30 The petitioner therefore, being the
principal employer and Lancer, being the labor-only contractor, are solidarily liable for respondents
unpaid money claims.

WHEREFORE, the petition for review is DENIED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-13778 April 29, 1960

PHILIPPINE EDUCATION CO., INC., petitioner,

vs.
UNION OF PHILIPPINE EDUCATION EMPLOYEES (NLU) and THE COURT OF
INDUSTRIAL RELATIONS, respondents.

Marcial Esposo for petitioner.

Eulogio R. Lerum for respondent Union. Jose B. Bolisay for respondent CIR.

MONTEMAYOR, J.:

The Philippine Education Company, Inc. is appealing the order of the Court of Industrial Relations, dated
February 7, 1958, directing it to reinstate its former employee, Ernesto Carpio, to his former or equivalent
position, without backpay, and from the resolution of the same court in banc, dated March 22, 1958,
denying the company's motion for reconsideration.

Ernesto Carpio and other employees of the company, members of the Union of Philippine Education
Employees (NLU) joined a strike staged on January 16, 1953. After the labor dispute was settled, the
Industrial Court ordered the reinstatement of the strikers, including Carpio. The company, however,
opposed the reinstatement of Carpio for the reason that a criminal complaint had been filed against him in
the Municipal Court of Manila for theft of magazines allegedly belonging to the company. He was
convicted and sentenced to two months and one day of arresto mayor. On appeal to the Court of First
Instance, Carpio was acquitted on the ground of reasonable doubt.

The question of Carpio's reinstatement was heard by the Industrial Court where the parties submitted as
evidence the transcript of the stenographic notes taken during the hearing in the criminal case before the
Court of First Instance of Manila, the exhibits presented in said case, as well as the decisions of the
Municipal Court convicting him, and that of the Court of First Instance acquitting him, or rather
dismissing the case against him on reasonable doubt. After said hearing, the Industrial Court agreed with
the finding of the Court of First Instance that the offense had not been proven beyond reasonable doubt
and held that Carpio's acquittal entitled him to reinstatement, though without backpay.

We have examined the aforementioned evidence, and we are inclined to agree with the Municipal Court
that Carpio's guilt had been duly established. At least, the preponderance of evidence was against his
innocence. The question for determination is whether the whether the acquittal of an employee, specially
on the ground of reasonable doubt, in a criminal case for theft involving articles and merchandise
belonging to his employer, entitles said employee to reinstatement.

In the case of National Labor Organization of Employees and Laborers vs. Court of Industrial Relations,
95 Phil., 727; Off. Gaz. (9) 4219, we said:

. . . the acquittal of a employee in a criminal case is no bar to the Court of Industrial Relations,
after proper hearing, finding the same employee guilty of facts inimical to the interests of his
 employer and justifying loss of confidence in him by said employer, thereby warranting his
dismissal or the refusal of the Company to reinstate him. The reason for this is not difficult to see.
The evidence required by law to establish guilt and to warrant conviction in a criminal case
substantially differs from the evidence necessary to establish responsibility or liability in a civil or
non-criminal case. The difference is in the amount and weight of evidence and also in degree. In a
criminal case, the evidence or proof must be beyond reasonable doubt while in a civil or non
criminal case it is merely preponderance of evidence. In further support of this principle we may
refer to Art. 29 of the New Civil Code (Rep. Act 386) which provides that when the accused in a
criminal case is acquitted on the ground of reasonable doubt a civil action for damages for the
same act or omission may be instituted where only a preponderance of evidence is necessary to
establish liability. From all this it is clear that the Court of Industrial Relations was justified in
denying the petition of Rivas and Tolentino for reinstatement in the cement company, because of
their illegal possession of hand grenades intended by them for purposes of sabotage in connection
with the strike on March 16, 1952.

Then in the case of National Labor Union vs. Standard Vacuum Oil Company, 73 Phil., 279, the City
Fiscal refused to prosecute two employees charged with theft for lack of evidence and yet this Tribunal
upheld their dismissal from the employer company on the ground that their employer had ample reason to
distrust them.

The relation of employer and employee, specially where the employee has access to the employer's
property in the form of articles and merchandise for sale, necessarily involves trust and confidence. If said
merchandise are lost and said loss is reasonably attributed to said employee, and he is charged with theft,
even if he is acquitted of the form of articles and merchandise for sale, necessarily involves trust and
confidence. If said merchandise are lost and said loss is reasonably attributed to said employee, and he is
charged with theft, even if he is acquitted of the charge on reasonable doubt, when the employer has lost
its confidence in him, it would be highly unfair to require said employer to continue employing him or to
reinstate him, for in that case the former might find it necessary for its protection to employ another
person to watch and keep an eye on him. In the present case, Carpio was refused reinstatement not
because of any union affiliation or activity or because the company has been guilty of any unfair labor
practice. As already stated, Carpio was convicted in the Municipal Court and although he was acquitted
on reasonable doubt in the Court of First Instance, the company had ample reason to distrust him. Under
the circumstances, we cannot in conscience require the company to reemploy or reinstate him.

In view of the foregoing, the appealed orders of the Industrial Court of February 7, 1958 and March 22,
1958 are hereby reversed. No costs.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 78090 July 26, 1991

PACIFIC MILLS, INC., petitioner,

vs.
ZENAIDA ALONZO, respondent.

Napoleon L. Apostol for petitioner.

NARVASA, J.:p

From July 30, 1973, Zenaida Alonzo was employed as a ring frame operator in the Pacific Mills, Inc. until
September 30, 1982 when she was discharged by Management.

The record shows that in the early afternoon of September 22, 1982, Zenaida challenged Company
Inspector Ernesto Tamondong to a fight, saying: "Putang Ina mo, lumabas ka, tarantado, kalalaki mong
tao, duwag ka . . Ipagugulpi kita sa labas at kaya kitang ipakaladkad dito sa loob ng compound palabas ng
gate sa mga kamag-anak ko." And suiting action to the word, she thereupon boxed Tamondong in the
stomach. The motive for the assault was Zenaida's resentment at having been reprimanded, together with
other employees, two days earlier by Tamondong for wasting time by engaging in Idle
chatter. 1 Tamondong forthwith reported the incident to the firm's Administrative Manager 2 as well as the
Chairman of Barangay Balombato, Quezon City. 3

On September 30, 1982, Zenaida Alonzo was given a Memorandum by the company's Executive Vice
President & General Manager terminating her employment as of October 1, 1982 on various grounds:
poor work, habitual absences and tardiness, wasting time, insubordination and gross disrespect. The
service of that memorandum of dismissal on her was not preceded by any complaint, hearing or other
formality. These were apparently considered unnecessary by Management 4 in view of the provision in
the Company Rules and Regulations (embodied in the Collective Bargaining Agreement between the
company and the union representing the employees) that:

Fighting or attempting to inflict harm to another employee, will render (sic) the aggressor
to outright dismissal.

It was only at the hearing of the complaint for illegal dismissal (and non-payment of proportionate 13th
month pay) instituted by Zenaida on October 4, 1982 in the NCR Arbitration Branch, that evidence was
presented by the company not only of the assault by Zenaida on her superior but also of many other
violations by her of company rules and regulations, in an attempt to substantiate the validity of her
dismissal from work.

The Labor Arbiter found that Alonzo had indeed verbally abused and struck her superior, Tamondong,
and rejected her contention that the assault was not punishable since it was "not work-connected and was
provoked/instigated by Ernesto Tamondong." 5 The Arbiter also declared as "fully established the
previous infractions of complainant," these being "a matter of record and not denied by complainant
(Zenaida)."

The Arbiter was of the view, however, that Alonzo was entitled to relief, because (a) the penalty imposed
was "harsh and severe and not commensurate with the offense, . . . suspension of three (3) months . .
(being) the proper, just and reasonable penalty . . .;" and because (b) the company had failed "to
investigate complainant before she was dismissed." The Arbiter thus ordered Pacific Mills, Inc., Zenaida's
employer:

. . . to reinstate complainant without loss of seniority rights and to pay her backwages
from January 1, 1983 until fully reinstated, the period from October 1, 1982 to December
31, 1982 complainant being under suspension without pay . . . (as well as) to pay
complainant's 13th month pay in the amount of THREE HUNDRED FIFTY-ONE
PESOS ONLY (P351.00).

Acting on the employer's appeal, the National Labor Relations Commission rendered judgment on March
23, 1987, sustaining the Labor Arbiter's findings. It however limited the award of back wages to Zenaida
only to three (3) years, in accordance with this Court's judgment in Feati University Faculty Club
(PAFLU) vs. Feati University, 58 SCRA 396. 6

Pacific Mills Inc. has instituted in this Court the special civil action of certiorari at bar praying for
nullification of the judgment of the NLRC for having been rendered with grave abuse of discretion.

In the comment thereon, 7 required of him by the Court, the Solicitor General opined that:

. . . both the Labor Arbiter and the NLRC apparently failed to take into consideration the
fact that Zenaida Alonzo was dismissed not because of this isolated act (of assault against
her superior) but rather because of numerous and repeated violations of company rules
and regulations. It was only this last incident which compelled Pacific Mills, Inc. to
finally terminate her services. It is the totality of the infractions committed by the
employee which should have been considered in determining whether or not there is just
cause for her dismissal.

Zenaida Alonzo was caught several times leaving her place of work to chat with her co-
employees. This is reprehensible conduct since, as ring frame operator, she must be at her
post during work hours to prevent the occurrence of incidents which could damage the
machine. The company inspector precisely warned her against doing this. She had also
been repeatedly reprimanded for insubordination, habitual tardiness, wasting time and not
wearing the required company uniform, In spite of these infractions the company bore
with her services and did not see fit to dismiss her. Her assault on the company inspector
was apparently the last straw which compelled Pacific Mills, Inc. to terminate her
services.

Accordingly, the Solicitor General recommended "payment of separation pay equivalent to three (3) years
backwages but without reinstatement" and of "proportionate 13th month pay."

For their part, the Chief Legal Officer of the NLRC, 8 and the private respondent, 9 insist that since the
dismissal of Zenaida Alonzo was not preceded by any notice of the charges and a hearing thereon, the
judgment of the NLRC must be sustained.
Decisive of this controversy is the judgment of the Court en banc in Wenphil Corporation v. NLRC,
promulgated on February 8, 1989, 10 in which the following policy pronouncements were made:

The Court holds that the policy of ordering the reinstatement to the service of an
employee without loss of seniority and the payment of his wages during the period of his
separation until his actual reinstatement but not exceeding three (3) years without
qualification or deduction, when it appears he was not afforded due process, although his
dismissal was found to be for just and authorized cause in an appropriate proceeding in
the Ministry of Labor and Employment, should be re-examined. It will be highly
prejudicial to the interests of the employer to impose on him the services of an employee
who has been shown to be guilty of the charges that warranted his dismissal from
employment. Indeed, it will demoralize the rank and file if the undeserving, if not
undesirable, remains in the service.

Thus in the present case, where the private respondent, who appears to be of violent
temper, caused trouble during office hours and even defied his superiors as they tried to
pacify him, should not be rewarded with reemployment and back wages. It may
encourage him to do even worse and will render a mockery of the rules of discipline that
employees are required to observe. Under the circumstances, the dismissal of the private
respondent for just cause should be maintained. He has no right to return to his former
employer.

However, the petitioner (employer) must nevertheless be held to account for failure to
extend to private respondent his right to an investigation before causing his dismissal.
The rule is explicit as above discussed. The dismissal of an employee must be for just or
authorized cause and after due process (Section 1, Rule XIV, Implementing Regulations
of the Labor Code). Petitioner committed an infraction of the second requirement. Thus,
it must be imposed a sanction for its failure to give a formal notice and conduct an
investigation as required by law before dismissing . . . (respondent) from employment.
Considering the circumstances of this case petitioner must indemnify the private
respondent the amount of P1,000.00. The measure of tills award depends on the facts of
each case and the gravity of the omission committed by the employer.

The Court perceives no sufficient cause, it has indeed been cited to none by the respondents, to decline to
apply the Wenphil doctrine to the case at bar.

While it is true that Pacific Mills, Inc. had not complied with the requirements of due process prior to
removing Zenaida Alonzo from employment, it is also true that subsequently, in the proceedings before
the Labor Arbiter in which Zenaida Alonzo had of course taken active part, it had succeeded in
satisfactorily proving the commission by Zenaida of many violations of company rules and regulations
justifying termination of her employment. Under the circumstances, it is clear that, as the Solicitor
General has pointed out, the continuance in the service of the latter is patently inimical to her employer's
interests and that, citing San Miguel Corporation v. NLRC, 11 the law, in protecting the rights of the
laborer authorizes neither oppression nor self-destruction of the employer. And it was oppressive and
unjust in the premises to require reinstatement of the employee.

WHEREFORE, the petition is granted and the challenged decision of the respondent Commission dated
March 23, 1987 and that of the Labor Arbiter thereby affirmed, are NULLIFIED AND SET ASIDE.
However, the petitioner is ordered to pay private respondent a proportionate part of the 13th month pay
due her, amounting to P351.00 as well as to indemnify her in the sum of P1,000.00. No costs.
SO ORDERED.
 [G.R. No. 125792. November 9, 1998]

PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,

LABOR ARBITER MANUEL ASUNCION; MANUEL PARENAS, DANIEL GACO,
RODOLFO SIARON, ALFREDO C. MONTILLA, ROMULO S. CASTRO, ELSA
CASTRO, MARCELO PARAGAS, ROMULO PARANE, RAFAEL SANCHEZ,
INOCENCIO ALCANTARA, REYNALDO PARAISO, ROBERTO GERONIMO,
NOMER E.PESCANTE, BENEDICTO SANTOS, ALBERTO TOMAS, BONIFACIO
BAYETA JR., DANILO RODRIGUEZ, CARLETO DE LA CRUZ, RAFAEL BEQUIO,
EDUARDO SITJAR, RUBEN TANSECO, TODORO K. DISCAYA, ERNESTO
EVARDONE, ARNULFO LAVILLA, GLECERIO ELABARIN, MARCELINO CANEDA,
EPIFANIO GALIBO, BENJAMIN GANDELARIA, LINO B. DAHOHOY, AVELINO
MULLET, JIMMY M. CORDERO, IVANHOE MAGINO, FELIX V. CATINDOY,
RUBEN DALUZ, ABENIR YARA, SANTIAGO CORTEZ JR., ARMANDO P. LUCIDO,
ALBERTO MONTILLA, RENERIO CAPON, LEONARDO BARROZO, IRENEO
FRONDOZO, DIONESIO BANARES, MARCELO MARZON, ALFREDO STA. MARIA,
BERNARDO MAMARIL, CARLOS DELLORO, ALCON DE LA TORRE,
FLORENTINO PESTIDO and STELLAR INDUSTRIAL SERVICES, INC., respondents.

DECISION
PANGANIBAN, J.:

In legitimate job contracting, an independent contractor undertakes to perform work on its own
account, under its own responsibility and according to its own manner and method, free from the control
and direction of the principal. No employment relationship arises between its employees and the
principal. Consequently, the said employees can claim separation pay only from the independent
contractor, and not from the principal.

The Case

These principles are used by the Court in granting this special civil action for certiorari, seeking to
nullify the July 13, 1994 Decision and the June 27, 1996 Resolution of the National Labor Relations
Commission, which held Philippine Airlines, Inc. liable for separation pay.
In five separate complaints for separation pay[1] filed by the individual private respondents against
Philippine Airlines (PAL), Inc. (herein petitioner) and Stellar Industrial Services, Inc. (STELLAR, for
brevity), Labor Arbiter Manuel P. Asuncion rendered on October 29, 1993 a Decision which held:[2]

WHEREFORE, premises considered, xxx PAL is hereby ordered to pay the following complainants
separation pay at the rate of one month salary for every year of service, thus:

1.) Manuel F. Parenas - P17,264.75

2.) Daniel Gaco - 37,982.45

3.) Rodolfo Siaron - 31,076.55

4.) Alfredo C. Montilla - 31,076.55

5.) Romulo S. Castro - 27,623.60

6.) Elsa C. Castro - 31,076.55

7.) Marcelo Paragas - 44,888.35

8.) Romulo Parane - 13,411.80

9.) Rafael Sanchez - 31,076.55

10.) Inocencio Alcantara - 51,794.25

11.) Reynaldo Paraiso - 17,264.75

12.) Roberto Geronimo - 58,700.15

13.) Nomer E. Pescante - 24,170.65

14.) Benedicto Santos - 55,247.20

15.) Alberto Tomas - 20,717.70

16.) Bonifacio Bayeta, Jr. - 27,623.60

17.) Danilo Rodriguez - 27,623.60

18.) Carleto de la Cruz - 44,888.35

19.) Rafael Bequio - 20,717.70

20.) Eduardo Sitjar - 20,717.70

21.) Ruben M. Tanseco - 20,717.70

22.) Teodoro K. Discaya - 44,888.35

23.) Ernesto Evardone - 48,341.30

24.) Arnulfo Lavilla - 10,358.85

25.) Glecerio Elabarin - 27,623.60

26.) Marcelino Caneda - 27,623.60

27.) Epifanio Galibo - 20,717.70

28.) Benjamin Gandalera - 58,700.15

29.) Lino B. Dagohoy - 27,623.60

30.) Avelino Mullet - 27,623.60

31.) Jimmy M. Cordero - 20,717.70

32.) Ivanhoe Magno - 41,435.40

33.) Felix V. Catindoy - 24,170.65

34.) Ruben Daluz - 37,982.45

35.) Abenir R. Yarra - 41,435.40

36.) Santiago Cortes Jr. - 24,170.65

37.) Armando P. Lucido - 24,170.65

38.) Alberto Montilla - 34,529.50

39.) Renerio Capon - 17,264.75

40.) Leonardo Barroso - 6,905.90

41.) Ireneo Frondozo - 62,153.10

42.) Dionesio Banares - 24,170.65

43.) Marcelo Marzan - 20,717.70

44.) Alfredo Sta. Maria - 55,247.20

45.) Bernardo Mamaril - 13,811.80

46.) Carlos Delloro - 44,888.35

47.) Alcon de la Torre - 24,170.65

48.) Florentino Pestijo - 24,170.65

The complaints of Edwin Pilapil, Pedro Bermas, and Orlando Orpiada against Stellar Industrial Services,
Inc., are dismissed for lack of merit.

On appeal, the National Labor Relations Commission (NLRC)[3] affirmed the labor arbiters Decision
in this wise:[4]
WHEREFORE, except insofar as Stellar Industrial Services, Inc. is held jointly and severally liable with
Philippine Airlines for the payment of complainants separation benefits, the Decision appealed from is
hereby AFFIRMED.

However, acting on the Motions for Reconsideration separately filed by petitioner and STELLAR,
the NLRC modified its earlier Decision and ruled:[5]

WHEREFORE, our July 13, 1994 decision is hereby modified in that the separation pay adjudged in this
case is hereby declared to be the sole liability of [Petitioner] Philippine Airlines, Inc.

The Facts

The undisputed facts of this case, as summarized by the solicitor general, are as follows:[6]

Sometime in 1977, PAL, a local air carrier, entered into a service agreement with STELLAR, a domestic
corporation engaged, among others, in the business of job contracting janitorial services (PAL and
STELLARs Agreement, Annex 1 of PALs Position Paper, Annex F, id.).

Pursuant to their service agreement, which was impliedly renewed year after year, STELLAR hired
workers to perform janitorial and maintenance services for PAL.Among those employed were
[Complainants] Manuel Parenas, Daniel Gaco, Rodolfo Siaron, Alfredo C. Montilla, Romulo S. Castro,
Elsa C. Castro, Marcelo Paragas, Romulo Parane, Rafael Sanchez, Inocencio [Alcantara], Reynaldo
Paraiso, Roberto Geronimo, Nomer E. Pescante, Benedicto Santos, Alberto Tomas, Bonifacio Bayeta, Jr.,
Danilo Rodriguez, Carleto dela Cruz, Rafael Bequio, Eduardo Sitjar, Ruben Tanseco, Teodoro K.
Discaya, Ernesto Evardone, Arnulfo Lavilla, Glecerio Elabarin, Marcelino Caneda, Epifanio Galibo,
Benjamin Gandelaria, Lino B. Dahohoy, Avelino Mullet, Jimmy M. Cordero, Ivanhoe Magino, Felix B.
Catindoy, Ruben Daluz, Abenir Yara, Santiago Co[r]tez, Jr., Armando P. Lucido, Alberto Montilla,
Renerio Capon, Leonardo Barrozo, Ireneo Frondozo, Dionesio Banares, Marcelo Marzon, Alfredo Sta.
Maria, Bernardo Mamaril, Carlos Delloro, Aldon dela Torre and Florentino Pestido, who were assigned at
PALs various premises under the supervision of STELLARs supervisors/foremen and timekeepers. The
workers were also furnished by STELLAR with janitorial supplies, such as vacuum cleaner and polisher
(Please see Manuel Parenas Contract of Employment with STELLAR, Annex 1 of Annex E, id.;
STELLARs Position Paper, pp. 2-5, supra; TSN, May 20, 1993, pp. 15-16 and 19-20).

On December 31, 1990, the service agreement between PAL and STELLAR expired. PAL then called for
[the] bidding of its janitorial requirements. This notwithstanding, STELLAR exerted efforts to maintain
its janitorial contract with PAL which, in the meantime, allowed Manuel Parenas and others to work at
the PALs premises (STELLARs Position Paper, pp. 2-5, supra, and Memorandum of Appeal, Annex H,
pp. 3-4, id.; Carlos Callangas Affidavit, p. 2, pp. 156-160 Records; Annex 2 of STELLARs Position
Paper, supra; PALs Memorandum of Appeal, p. 2, Annex G, Petition).

Subsequently, in a letter dated October 31, 1990, PAL formally informed STELLAR that the service
agreement between them would no longer be renewed effective November 16, 1991, since PALs janitorial
requirements were bidded to three other job contractors (Annex 2 of STELLARs Position Paper, supra;
PALs Memorandum of Appeal, p. 2, supra).
Alleging that they were illegally dismissed, the aforenamed individual private respondents filed, from
January to June 1992, five complaints against PAL and STELLAR for illegal dismissal and for payment
of separation pay (Annexes C, C-1 to C-19, id.).

The Ruling of Respondent Commission

In its Decision affirming the ruling of the labor arbiter, Respondent Commission held petitioner, as
an indirect employer, jointly and severally liable with STELLAR for separation pay. First, the individual
private respondents work, although not directly related to the business of petitioner, was necessary and
desirable for the maintenance of the petitioners premises and airplanes. Second, the individual private
respondents were retained for thirteen long years, despite the fact that the contract, which petitioner had
entered into with STELLAR in 1977, was only for one year.
On reconsideration, the NLRC modified its earlier Decision by absolving STELLAR of liability,
thereby making PAL solely responsible for the award decreed by the labor arbiter. It held
that, first, petitioner was the employer of the individual private respondents, for it engaged in labor-only
contracting with STELLAR. This was shown by the failure of petitioner to refute the factual finding that
it continued to employ the individual private respondents after the expiration of the service contract on
December 31, 1990. Second, the individual private respondents admission in their Complaint that they
were employees of STELLAR was not conclusive, as the existence of an employer-employee relation was
a question of law that could not be the subject of stipulation. Respondent Commission concluded that
their dismissal was without just and valid cause. Because they were no longer seeking reinstatement,
petitioner was liable for separation pay.
Hence, this petition.[7] When required by the Court to comment on behalf of Respondent
Commission, the solicitor general manifested his disagreement with the assailed Decision and
Resolution. Thus, Respondent Commission, in compliance with the February 5, 1997 Resolution of this
Court,[8] filed its own Comment.

The Issues

In its Memorandum,[9] petitioner imputes grave abuse of discretion to Respondent Commission in

this wise:[10]

(a) [I]n holding that the janitorial service agreement with STELLAR was a labor-only arrangement;

(b) [I]n holding that PAL continued with the services of the individual respondents after November 16,
1991, when the janitorial agreement with STELLAR expired; and

(c) [I]n holding PAL liable for payment of separation pay to the individual respondents."

The petition raises two main issues. First, whether the individual private respondents are regular
employees of PAL. Second, whether petitioner is liable to them for separation pay. The resolution of the
first issue involves a determination of (1) whether petitioner was a labor-only contractor; and (2) whether
the individual private respondents became regular employees of PAL because they were allowed to
continue working for petitioner after the expiration of the service contract.
 The Courts Ruling

The petition is meritorious.

First Issue: No Employer-Employee Relation

Between Complainants and Petitioner

Janitorial Service Agreement Is

Not Labor-Only Contracting

Prohibited labor-only contracting is defined in Article 106 of the Labor Code as follows:

ART. 106. Contractor or subcontractor.xxx

xxxxxxxxx

There is labor-only contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such persons are performing activities which are directly
related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.

This definition covers any person who undertakes to supply workers to an employer, where such
person:

(1) Does not have substantial capital or investment in the form of tools, equipment, [machinery], work
premises and other materials; and

(2) The workers recruited and placed by such person are performing activities which are directly related
to the principal business or operations of the employer in which workers are habitually employed.[11]

On the other hand, permissible job contracting requires the following conditions:

(1) The contractor carries on an independent business and undertakes the contract work on his own
account under his own responsibility according to his own manner and method, free from the control and
direction of his employer or principal in all matters connected with the performance of the work except as
to the results thereof; and

(2) The contractor has substantial capital or investment in the form of tools, equipment, [machinery],
work premises, and other materials which are necessary in the conduct of his business.[12]

Applying the foregoing provisions to the present case, the Court finds no basis for holding that PAL
engaged in labor-only contracting. The true nature of the individual private respondents employment is
evident from the service agreement between petitioner and STELLAR, which we reproduce hereunder:
1. The CONTRACTOR [STELLAR] undertakes to provide the following cleaning and janitorial
maintenance services.

Daily Routine:

(a) Dusting and/or damp-wiping of other vertical and horizontal surfaces that require daily
attention;

(b) Sweeping and mopping of floors;

(c) Polishing and spot-scrubbing of [illegible];

(d) Dusting, damp-wiping and polishing of [furniture], counters, xxx and other office fixtures;

(e) Emptying and cleaning of ash trays;

(f) Cleaning and disinfecting of toilets and washrooms;

(g) Cleaning of inside windows, glasses, surfaces, [partitions], etc.;

(h) On-the-job supervision.

2. The CONTRACTOR shall provide sufficient personnel, equipments [sic], supplies, and materials to
carry out the undertakings; specified in the preceding paragraph, except that water and electricity
consumption shall be for the account of the OWNER. The CONTRACTOR expressly represents that to
adequately and suitably comply with the undertakings under paragraph 1 of this Agreement, the
CONTRACTOR shall assign at least eight (8) employees, six (6) days a week except Legal Holidays, to
the OWNERs premises to perform the work undertaken by the CONTRACTOR under this
Agreement. To comply with such minimum requirements, the CONTRACTOR shall at all times be ready
with relievers and/or replacements to ensure continuous and uninterrupted work in case of absences of
each assigned employee.

(3) The equipment, materials and supplies to be used by the CONTRACTOR in connection with its
aforesaid undertakings shall be of high quality and shall not cause any damage to OWNERs premises and
properties or cause any injury or annoyance to the persons working or present in the premises. The
OWNER shall place at the disposal of the CONTRACTOR a suitable storage space with lock and key for
the safekeeping of the cleaning equipment and materials which the xxx CONTRACTOR shall use in
connection with its undertakings in xxx Agreement.

4. The CONTRACTOR warrants that the persons it shall employ to perform the work subject to this
Agreement shall be honest, reliable, carefully screened, trained, cooperative, and in possession of health
certificates and police clearances; they will be neat, presentable in appearance, attired in identifying
uniforms and provided with identification cards. The uniforms and identification cards shall be at the
expense of the CONTRACTOR.

5. In consideration of the services to be rendered by the CONTRACTOR, the OWNER shall pay to the
CONTRACTOR the sum of PESOS: THREE THOUSAND EIGHT HUNDRED FORTY (P3,840.00) per
month in Philippine Currency, payable in two equal payments on the 15th and end of each month without
necessity of demand. In the event that the minimum wage rate shall be increased by the operation of law,
there shall be a corresponding automatic increase in the consideration of the contract price to be paid by
the OWNER to the CONTRACTOR in consideration of the latters services.

6. In case the OWNER shall require the CONTRACTOR to perform the work provided under paragraph 1
hereof in excess of eight hours on: (1) any regular working day, the OWNER shall pay the
CONTRACTOR an additional amount to be computed in the following manner:

xxxxxxxxx

7. It is agreed that no authority has been conferred upon the CONTRACTOR by the OWNER to hire any
person on behalf of the latter and that each person employed or hired by the CONTRACTOR in carrying
out its part of this Agreement shall be paid by the CONTRACTOR, and that no such person employed or
hired shall be deemed [an] employee or agent of the OWNER.

8. It is furthermore agreed that the CONTRACTOR shall select, engage and discharge its employees and
shall have direct xxx control [of their] services. The CONTRACTOR shall likewise have absolute
prerogative to determine the rate of wages or salaries of the employees.

9. It is further agreed that the CONTRACTOR shall comply with all the requirements of laws, decrees,
municipal ordinances, and regulations including but not limited to payment of State Insurance Fund,
Medicare contributions, SSS contributions, and the Withholding Taxes of its employees.

10. This agreement shall be for a period of one (1) year from May 1, 1977 to April 30, 1978 and
[illegible].

The foregoing agreement clearly indicates that an employee-employer relation existed between the
individual private respondents and STELLAR, not PAL. The provisions of the agreement demonstrate
that STELLAR possessed these earmarks of an employer: (1) the power of selection and engagement of
employees (Stipulation Nos. 1, 4, 7 and 8), (2) the payment of wages (Stipulation Nos. 5, 6, 7 and 8), (3)
the power of dismissal, and (4) the power to control the employees conduct (Stipulation No. 8).[13]
Aside from these stipulations in the service agreement, other pieces of evidence support the
conclusion that STELLAR, not PAL, was the employer of the individual private respondents. A contract
of employment[14] existed between STELLAR and the individual private respondents, proving that it was
said corporation which hired them. It was also STELLAR which dismissed them, as evidenced by
Complainant Parenas termination letter, which was signed by Carlos P. Callanga, vice president for
operations and comptroller of STELLAR.[15] Likewise, they worked under STELLARs own supervisors,
Rodel Pagsulingan, Napoleon Parungao and Renato Topacio.[16] STELLAR even had its own collective
bargaining agreement with its employees, including the individual private respondents. [17] Moreover, PAL
had no power of control and dismissal over them.
In fact, STELLAR claims that it falls under the definition of an independent job
contractor. Thus, it alleges that it has sufficient capital in the form of tools and equipment, like vacuum
cleaners and polishers, and substantial capitalization as proven by its financial statements.[18] Further,
STELLAR has clients other than petitioner, like San Miguel Corporation, Hongkong and Shanghai Bank,
Eveready, Benguet Management Corporation and Japan Airlines.[19]
All these circumstances establish that STELLAR undertook said contract on its account, under its
own responsibility, according to its own manner and method, and free from the control and direction of
the petitioner. Where the control of the principal is limited only to the result of the work, independent job
contracting exists.[20] The janitorial service agreement between petitioner and STELLAR is definitely a
case of permissible job contracting.

Extension of Service Contract is

Not a Source of Employer-Employee
Relation

Respondent NLRC found that petitioner was the individual private respondents employer, based
primarily on the continued engagement of the employees after the expiration of the service contract. It
ruled:[21]

Our taking cognizance of the fact that PAL, despite the expiration of its contract with Stellar on
December 31, 1990 continued with the service of some of the complainants as late as 1991, should have
been enough notice for them to refute this fact come [the] xxx motion for reconsideration.

But again, perusing PALs motion for reconsideration, we note that xxx it never refuted the finding below
that it continued employing the complainants after its service contract with Stellar expired. We thus
cannot but hold on to our view that PAL should be answerable to the separation pay awarded below not
only for its engaging in a labor-only contract with Stellar but more importantly for its continued
employment of complainants after its service contract with Stellar (the argued employer of complainants)
expired.

In its Comment,[22] NLRC, citing Loadstar Shipping Co., Inc. v. Gallo,[23] defended its position on
the ground that judicial review by this Court does not include appreciation of the evidence, but is confined
only to issues of jurisdiction or grave abuse of discretion.
In trying to support this finding, the individual respondents presented, on the other hand, an entirely
different theory -- that petitioner, by allowing them to continue working after the expiration of the service
agreement, became their successor-employer. In their Memorandum,[24] they argue:

xxx [T]he records and evidence show that the janitorial service contract between PAL and Stellar expired
on December 31, 1990, and not on November 16, 1991 [as stated in the October 31, 1990 letter of the
petitioner].

xxx xxx xxx

As a consequence of petitioners letter and upon knowledge of the termination of [the] janitorial service
contract, respondent Stellar formally notified each of the [complainants] that their individual employment
contract likewise be terminated effective November 16, 1991. Furthermore, it has been expressly and
uniformly stated in each of [complainants] employment contract that their services would last upon the
termination of the janitorial service contract between PAL and Stellar which was of course supposedly on
December 31, 1990. By working up to the time of the final termination which is November 16, 1991,
from December 31, 1990, private respondents became direct employees of PAL.

xxx xxx xxx

Petitioners continued employment of [complainants] inspite of the expiration of the janitorial contract is
an implied absorption to the point of making them its regular employees and making illegal their
subsequent termination from service. xxxx As held by the Supreme Court, employees absorbed by [a]
successor employer enjoy the continuity of their employment status and their rights and privileges
(International Container Terminal Services, Inc. vs. NLRC, G.R. N[o]. 982950-99, April 10, 1996, citing
the case of Sumandi vs. Leogardo, et al., G.R. N[o]. 67635, January 17, 1985). xxx.[25]

Both contentions are untenable. First, while the issue of labor-only contracting may involve some
factual considerations, the existence of an employer-employee relation is nonetheless a question of
law.[26] Thus, it falls squarely within the ambit of this Courts judicial review. Second, individual private
respondents invocation of the successor-employer doctrine is not warranted. This doctrine involves a
transfer of ownership of the business to a new employer. Where the change of ownership is in bad faith or
is used to defeat the rights of labor, the successor-employer is deemed to have absorbed the employees
and is held liable for the transgressions of his or her predecessor.[27] Petitioner, however did not become
the successor-employer of the individual private respondents when the service contract expired. There
was no transfer of the business of STELLAR in this particular case. The separate undertakings of
petitioner and STELLAR continued even after the expiration of the service contract and the dismissal of
individual private respondents.
Indeed, we agree with the solicitor generals explanation of this matter:[28]

xxx What actually happened was that PAL and STELLAR impliedly renewed, as they had previously
done before, their service agreement until PALs janitorial requirements were bidded to other job
contractors. This explains why the individual private respondents remained working at PALs premises
even after December 31, 1990.

From the foregoing disquisition, it is evident that petitioner was engaged in permissible job
contracting and that the individual private respondents, for the entire duration of their employ, were
employees not of petitioner but of STELLAR. In legitimate job contracting, no employer-employee
relation exists between the principal and the job contractors employees. The principal is responsible to the
job contractors employees only for the proper payment of wages.[29] But in labor-only contracting, an
employer-employee relation is created by law between the principal and the labor-only contractors
employees, such that the former is responsible to such employees, as if he or she had directly employed
them.[30] Besides, the Court has already taken judicial notice of the general practice adopted in several
government and private institutions of securing janitorial services on an independent contractor basis.[31]
Second Issue:

STELLAR Is Liable for Separation Pay

Short of expressly admitting to be the employer of the individual private respondents, STELLAR
avers that the former were project employees, whose employment was coterminous with the service
agreement,[32] as evidenced by the following stipulations in their contract:[33]

1. The EMPLOYER hereby contracts the services of the EMPLOYEE to work as Janitor-CPD at the
project of the EMPLOYER with PAL.

2. It is expressly agreed and understood that the work of the EMPLOYEE shall last only during and shall
in no case extend beyond the period fixed for the duration of the contract between the EMPLOYER and
PAL covering the project to which the EMPLOYEE is assigned as specified in the second WHEREAS
hereof. Upon the expiration of said contract the employment of the said employee is deemed
automatically terminated without further notice.
 In order to avoid liability for separation pay, STELLAR argues that it terminated the services of the
individual private respondents for a just and valid cause: the completion of a specific project. Thus, they
are not entitled to separation pay.
The Court is not convinced. The position of STELLAR that individual private respondents were its
project employees is totally unfounded. A regular employee is distinguished from a project employee by
the fact that the latter is employed to carry out a specific project or undertaking, the duration or scope of
which was specified at the time the employees were engaged.[34] A project has reference to a particular job
or undertaking that may or may not be within the regular or usual business of the employer.[35] In either
case, the project must be distinct, separate and identifiable from the main business of the employer, and
its duration must be determined or determinable.
In the case at bar, despite the protestations of STELLAR, the service agreement was not a project
because its duration was not determined or determinable. While the service agreement may have had a
specific term, STELLAR disregarded it, repeatedly renewed the service agreement, and continued hiring
the individual private respondents for thirteen consecutive years. Had STELLAR won the bidding, the
alleged project would have never ended. In any event, the aforesaid stipulations in the employment
contract are not included in Articles 282 and 283 of the Labor Code as valid causes for the dismissal of
employees.
Again, we must emphasize that the main business of STELLAR is the supply of manpower to
perform janitorial services for its clients, and the individual private respondents were janitors engaged to
perform activities that were necessary and desirable to STELLARs enterprise.[36] In this case, we hold that
the individual private respondents were STELLARs regular employees, and there was no valid cause for
their dismissal.
WHEREFORE, the petition is hereby GRANTED. The assailed Decision and Resolution are SET
ASIDE insofar as they held PAL liable for separation pay.The July 13, 1994 Decision is however
reinstated insofar as it ORDERED STELLAR liable for such award.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 78409 September 14, 1989

NORBERTO SORIANO, petitioner,

vs.
OFFSHORE SHIPPING AND MANNING CORPORATION, KNUT KNUTSEN O.A.S., and
NATIONAL LABOR RELATIONS COMMISSION (Second Division), respondents.

R. C. Carrera Law Firm for petitioner.

Elmer V. Pormento for private respondents.

FERNAN, C.J.:

This is a petition for certiorari seeking to annul and set aside the decision of public respondent National
Labor Relations Commission affirming the decision of the Philippine Overseas Employment
Administration in POEA Case No. (M)85-12-0953 entitled "Norberto Soriano v. Offshore Shipping and
Manning Corporation and Knut Knutsen O.A.S.", which denied petitioner's claim for salary differential
and overtime pay and limited the reimbursement of his cash bond to P15,000.00 instead of P20,000.00.

In search for better opportunities and higher income, petitioner Norberto Soriano, a licensed Second
Marine Engineer, sought employment and was hired by private respondent Knut Knutsen O.A.S. through
its authorized shipping agent in the Philippines, Offshore Shipping and Manning Corporation. As
evidenced by the Crew Agreement, petitioner was hired to work as Third Marine Engineer on board Knut
Provider" with a salary of US$800.00 a month on a conduction basis for a period of fifteen (15) days. He
admitted that the term of the contract was extended to six (6) months by mutual agreement on the promise
of the employer to the petitioner that he will be promoted to Second Engineer. Thus, while it appears that
petitioner joined the aforesaid vessel on July 23, 1985 he signed off on November 27, 1985 due to the
alleged failure of private respondent-employer to fulfill its promise to promote petitioner to the position
of Second Engineer and for the unilateral decision to reduce petitioner's basic salary from US$800.00 to
US$560.00. Petitioner was made to shoulder his return airfare to Manila.

In the Philippines, petitioner filed with the Philippine Overseas Employment Administration (POEA for
short), a complaint against private respondent for payment of salary differential, overtime pay, unpaid
salary for November, 1985 and refund of his return airfare and cash bond allegedly in the amount of
P20,000.00 contending therein that private respondent unilaterally altered the employment contract by
reducing his salary of US$800.00 per month to US$560.00, causing him to request for his repatriation to
the Philippines. Although repatriated, he claims that he failed to receive payment for the following:

1. Salary for November which is equivalent to US$800.00;

2. Leave pay equivalent to his salary for 16.5 days in the sum of US$440.00;
 3. Salary differentials which is equivalent to US$240.00 a month for four (4) months and
one (1) week in the total sum of US$1,020,00;

4. Fixed overtime pay equivalent to US$240.00 a month for four (4) months and one (1)
week in the sum of US$1,020.00;

5. Overtime pay for 14 Sundays equivalent to US$484.99;

6. Repatriation cost of US$945.46;

7. Petitioner's cash bond of P20,000.00. 1

In resolving aforesaid case, the Officer-in-Charge of the Philippine Overseas Employment Administration
or POEA found that petitioner-complainant's total monthly emolument is US$800.00 inclusive of fixed
overtime as shown and proved in the Wage Scale submitted to the Accreditation Department of its Office
which would therefore not entitle petitioner to any salary differential; that the version of complainant that
there was in effect contract substitution has no grain of truth because although the Employment Contract
seems to have corrections on it, said corrections or alterations are in conformity with the Wage Scale duly
approved by the POEA; that the withholding of a certain amount due petitioner was justified to answer for
his repatriation expenses which repatriation was found to have been requested by petitioner himself as
shown in the entry in his Seaman's Book; and that petitioner deposited a total amount of P15,000.00 only
instead of P20,000.00 cash bond. 2

Accordingly, respondent POEA ruled as follows:

VIEWED IN THE LIGHT OF THE FOREGOING, respondents are hereby ordered to

pay complainant, jointly and severally within ten (10) days from receipt hereof the
amount of P15,000.00 representing the reimbursement of the cash bond deposited by
complainant less US$285.83 (to be converted to its peso equivalent at the time of actual
payment).

Further, attorney's fees equivalent to 10 % of the aforesaid award is assessed against

respondents.

All other claims are hereby dismissed for lack of merit.

SO ORDERED. 3

Dissatisfied, both parties appealed the aforementioned decision of the POEA to the National Labor
Relations Commission. Complainant-petitioner's appeal was dismissed for lack of merit while
respondents' appeal was dismissed for having been filed out of time.

Petitioner's motion for reconsideration was likewise denied. Hence this recourse.

Petitioner submits that public respondent committed grave abuse of discretion and/or acted without or in
excess of jurisdiction by disregarding the alteration of the employment contract made by private
respondent. Petitioner claims that the alteration by private respondent of his salary and overtime rate
which is evidenced by the Crew Agreement and the exit pass constitutes a violation of Article 34 of the
Labor Code of the Philippines. 6
On the other hand, public respondent through the Solicitor General, contends that, as explained by the
POEA: "Although the employment contract seems to have corrections, it is in conformity with the Wage
Scale submitted to said office. 7

Apparently, petitioner emphasizes the materiality of the alleged unilateral alteration of the employment
contract as this is proscribed by the Labor Code while public respondent finds the same to be merely
innocuous. We take a closer look at the effects of these alterations upon petitioner's right to demand for
his differential, overtime pay and refund of his return airfare to Manila.

A careful examination of the records shows that there is in fact no alteration made in the Crew
Agreement 8 or in the Exit Pass. 9 As the original data appear, the figures US$800.00 fall under the
column salary, while the word "inclusive" is indicated under the column overtime rate. With the supposed
alterations, the figures US$560.00 were handwritten above the figures US$800.00 while the figures
US$240.00 were also written above the word "inclusive".

As clearly explained by respondent NLRC, the correction was made only to specify the salary and the
overtime pay to which petitioner is entitled under the contract. It was a mere breakdown of the total
amount into US$560.00 as basic wage and US$240.00 as overtime pay. Otherwise stated, with or without
the amendments the total emolument that petitioner would receive under the agreement as approved by
the POEA is US$800.00 monthly with wage differentials or overtime pay included. 10

Moreover, the presence of petitioner's signature after said items renders improbable the possibility that
petitioner could have misunderstood the amount of compensation he will be receiving under the contract.
Nor has petitioner advanced any explanation for statements contrary or inconsistent with what appears in
the records. Thus, he claimed: [a] that private respondent extended the duration of the employment
contract indefinitely, 11 but admitted in his Reply that his employment contract was extended for another
six (6) months by agreement between private respondent and himself: 12 [b] that when petitioner
demanded for his overtime pay, respondents repatriated him 13 which again was discarded in his reply
stating that he himself requested for his voluntary repatriation because of the bad faith and insincerity of
private respondent; 14 [c] that he was required to post a cash bond in the amount of P20,000.00 but it was
found that he deposited only the total amount of P15,000.00; [d] that his salary for November 1985 was
not paid when in truth and in fact it was petitioner who owes private respondent US$285.83 for cash
advances 15 and on November 27, 1985 the final pay slip was executed and signed; 16 and [e] that he
finished his contract when on the contrary, despite proddings that he continue working until the renewed
contract has expired, he adamantly insisted on his termination.

Verily, it is quite apparent that the whole conflict centers on the failure of respondent company to give the
petitioner the desired promotion which appears to be improbable at the moment because the M/V Knut
Provider continues to be laid off at Limassol for lack of charterers. 17

It is axiomatic that laws should be given a reasonable interpretation, not one which defeats the very
purpose for which they were passed. This Court has in many cases involving the construction of statutes
always cautioned against narrowly interpreting a statute as to defeat the purpose of the legislator and
stressed that it is of the essence of judicial duty to construe statutes so as to avoid such a deplorable result
(of injustice or absurdity) and that therefore "a literal interpretation is to be rejected if it would be unjust
or lead to absurd results." 18

There is no dispute that an alteration of the employment contract without the approval of the Department
of Labor is a serious violation of law.
Specifically, the law provides:

Article 34 paragraph (i) of the Labor Code reads:

Prohibited Practices. It shall be unlawful for any individual, entity, licensee, or holder
of authority:

xxxx

(i) To substitute or alter employment contracts approved and verified by the Department
of Labor from the time of actual signing thereof by the parties up to and including the
period of expiration of the same without the approval of the Department of Labor.

In the case at bar, both the Labor Arbiter and the National Labor Relations Commission correctly
analyzed the questioned annotations as not constituting an alteration of the original employment contract
but only a clarification thereof which by no stretch of the imagination can be considered a violation of the
above-quoted law. Under similar circumstances, this Court ruled that as a general proposition, exceptions
from the coverage of a statute are strictly construed. But such construction nevertheless must be at all
times reasonable, sensible and fair. Hence, to rule out from the exemption amendments set forth, although
they did not materially change the terms and conditions of the original letter of credit, was held to be
unreasonable and unjust, and not in accord with the declared purpose of the Margin Law. 19

The purpose of Article 34, paragraph 1 of the Labor Code is clearly the protection of both parties. In the
instant case, the alleged amendment served to clarify what was agreed upon by the parties and approved
by the Department of Labor. To rule otherwise would go beyond the bounds of reason and justice.

As recently laid down by this Court, the rule that there should be concern, sympathy and solicitude for the
rights and welfare of the working class, is meet and proper. That in controversies between a laborer and
his master, doubts reasonably arising from the evidence or in the interpretation of agreements and
writings should be resolved in the former's favor, is not an unreasonable or unfair rule. 20 But to disregard
the employer's own rights and interests solely on the basis of that concern and solicitude for labor is
unjust and unacceptable.

Finally, it is well-settled that factual findings of quasi-judicial agencies like the National Labor Relations
Commission which have acquired expertise because their jurisdiction is confined to specific matters are
generally accorded not only respect but at times even finality if such findings are supported by substantial
evidence. 21

In fact since Madrigal v. Rafferty 22 great weight has been accorded to the interpretation or construction of
a statute by the government agency called upon to implement the same. 23

WHEREFORE, the instant petition is DENIED. The assailed decision of the National Labor Relations
Commission is AFFIRMED in toto.

SO ORDERED.
68 Phil. 591

LAUREL, J.:
This is a petition for a writ of certiorari to review the decision of the Court of Industrial Relations
promulgated on January 14, 1939, denying the demands of the Pambusco Employees' Union, Inc.
The following are the pertinent facts which have given occasion to this industrial dispute: On March 26,
1938, the Pambusco Employees' Union, Inc., addressed a thirteen-point petition to the management of the
Pampanga Bus Co. Upon the failure of the company officials to act upon the petition, a strike was
declared by the workers on April 14, 1938. However, through the timely mediation of the Department of
Labor, a provisional agreement was reached, by virtue of which the strike was called off, eight demands
were granted, and the remaining five were submitted to the Court of Industrial Relations for settlement.
One of these demands, in the language of the petitioner, is that the respondent Pampanga Bus Co. "pay to
all Company drivers affiliated with the Pambusco Employees' Union, Inc., all the back overtime pay due
them under the law." After trial on the disputed demands, the Court of Industrial Relations decided inter
alia that the claim for back overtime pay could not be allowed.
The pertinent portion of the decision of the respondent Court of Industrial Relations is as follows:
"The evidence is clear that even before the final approval of Act No. 4242 amending Act No. 4123, the
Eight Hour Labor Law, by extending the provisions of the latter to other class of laborers including
drivers of public service vehicles, a petition was addressed by 44 drivers of the company to the Governor-
General asking him to veto the bill amending the law extending it to drivers for the reasons stated in their
petition (Exhibits 5 and 5-a). About the 6th day of September, 1935, a petition was again addressed by
97 drivers of the company to the Commissioner of Labor requesting adjustment of working hours to
permit them to retain their present status with the company as nearly as possible under the law (Exhibits
4, 4-a, 4-b, 4-c, 4-d and 4-e). This petition was prepared after a meeting of the employees was held and
was drawn with the help of the manager of the respondent about the last days of August, 1935. In
September, 1937, about 347 employees of the different departments of the company again addressed a
petition to the Director of Labor expressing their satisfaction with the hours they work and the pay they
receive for their labor including the special bonuses and overtime pay they receive for extra work, and
asking, in view thereof, that the law be not applied to them (Exhibits 6, 6-a to 6-g).
"After the enactment of Act No. 4242 several transportation companies operating motor buses filed with
the Commissioner of Labor petitions for a readjustment of the hours of labor specified in section 1 of the
Act on the basis of maintaining the status quo as to the hours the drivers were required to be actually on
duty in order to enable them to make the prescribed hours daily that the exigencies of the service required.
The petitions were based on the impracticability of applying the provisions of the law to drivers of public
service vehicles without disrupting the public service and causing pecuniary loss to both employers and
employees alike, and the resulting difficulties on the part of the drivers. The testimony of Atty. Carlos
Alvear on this point is uncontradicted. He testified that in 1935, he was president of the Philippine Motor
Association composed of bus operators operating in the Philippines, of which the respondent is a member.
Major Olson, who was at the time the executive secretary of the association, and himself took up the
matter with the Secretary of the Interior and the Secretary of Labor after the passage of the Act extending
the operation of the Eight Hour Labor Law to drivers. In their conference with the Commissioner of
Labor, they were told to take advantage of the provisions of the law in which they may apply for the
readjustment of the working hours, and in conformity with that suggestion, the executive secretary of the
association filed a formal petition, Exhibit 10, on September 5, 1935. When this was filed the
Department of Labor further suggested that the drivers of each company file and address a petition of
similar nature designating their representatives who will represent them in a conference that the
Commissioner of Labor may call for the purpose. With the filing of the petition, the conferees were
assured by the Under-Secretary of Labor that the enforcement of the Eight Hour Labor Law in so far as
the drivers were concerned, will be held in abeyance until such time as the meeting or investigations are
held. It is not clear as to whether investigations and hearings were finally made but the evidence indicates
that the petition was never decided and the companies continued its schedule of hours.
"Sections 3 and It of Act No. 4123 read as follows:
" 'Sec. 3. The Commissioner of Labor, with the advice of two representatives of the employers concerned,
designated by the latter, and of two representatives of the laborers concerned, designated by these, shall,
at the request of an interested party, decide in each case whether or not it is proper to increase or decrease
the number of hours of labor fixed in section one of this Act, either because the organization or nature of
the work require it, or because of lack or insufficiency of competent laborers for certain work in a
locality, or because the relieving of laborers must be done under certain conditions, or by reason of any
other exceptional circumstances or conditions of the work or industry concerned; but the number of hours
of labor shall in no case exceed twelve daily or seventy-two weekly,
" 'Sec. 4. Employees or laborers desiring an increase or decrease of the number of hours of labor shall
address an application to this effect to the Commissioner of Labor, stating their reasons. Upon receipt of
an application of this kind, the Commissioner of Labor shall call a meeting of the employers and laborers
of the establishment or industry concerned, for the designation of advisers as provided in the preceding
section hereof. The Commissioner of Labor or his authorized representative, together with the advisers,
shall make an investigation of the facts, giving special attention, in the first place, to the human aspect,
and in the second place, to the economic aspect of the matter, and he may for this purpose administer
oaths, take affidavits, examine witnesses and documents and issue subpoenas and subpoenas duces
tecum. The decision of the Commissioner of Labor may be reconsidered by him at any time.'

"It seems clear that the petitions of both employers and employees for the nonenforcement of the Eight
Hour Labor Law were made in accordance with these provisions of the law. Exhibit 9 of the respondent
which is a communication addressed by the Under-Secretary of Labor on September 6, 1935, to the A. L.
Ammen Transportation Company, Inc., defines the attitude taken by the Department of Labor in
connection with those petitions. It advises the company to submit an application under sections 3 and 4 of
Act No. 4123 above-quoted for an increase of working hours of such laborers as may fall under the
amendment and that pending final solution of said application, the Department of Labor will not make
any attempt to enforce said amendment. As has already been stated it is not clear whether final action or
decision has been made on the applications with respect to the drivers of the respondent; that it is
undeniable fact that up "to the outbreak of the dispute, the law was not observed nor enforced in the
company; and that upon mutual agreement arrived at by the parties on April 14, 1938, the company
worked out a schedule beginning May 1, 1938, placing all its employees under an eight-hour schedule.
"In view of the foregoing facts, the court is of the opinion that the drivers are not entitled to the overtime
pay demanded for the whole period the law was not observed or enforced in the company. They are
entitled to payment of wages for hours worked in excess of the legal hours only beginning May 1, 1938."

On January 30, 1939, the petitioner filed a motion for reconsideration which was denied by the Court of
Industrial Relations, sitting in banc, with the following observations:
"We have reviewed carefully the evidence on record with regard to the claim for back overtime pay and
we find that it amply supports the findings and conclusions set forth in the decision. The arguments
presented in this regard in support of the motion for reconsideration are virtually a repetition of the
reasons advanced in the memorandum of the petitioner filed before the case was decided and were already
discussed and considered in the decision. The evidence permits no other conclusion than that the
employees were not coerced nor intimidated by the respondent on the repeated occasions they signed and
presented to the Department of Labor their petitions for nonenforcement of the Eight Hour Labor Law.
The employees were indubitably aware of certain hardships the enforcement of the law at that time would
bring to them and these prompted their attitude of preferring the continuation of the schedule of hours
observed prior to the enactment of the legislation extending the benefits of the Eight Hour Labor Law to
drivers of motor vehicles in public utility enterprises. Whatever pecuniary advantage they would have
gained by the strict observance of the law by the company should they be made to work more than eight
hours a day was apparently waived or given up by them in exchange of their personal convenience and of
the additional monthly pay the respondent gave to those employees who were assigned to routes where
the daily working hours exceeded the maximum fixed by law. The evidence that the company paid
additional salaries not only to drivers but also to its conductors who were assigned to such routes stands
uncontradicted and no attempt even was made by the petitioner to deny it. Without need of passing on the
question as to whether the provisions of the law are mandatory or not, in the light of the above facts and
applying the rules of equity invoked by the union, we are constrained to hold that the petitioners are not
rightly entitled to the payment sought."

In Kapisanan ng mga Mangagawa sa Pantranco vs. Pangasinan Transportation Co. (39 Off. Gaz., 1217),
we have held that, to be entitled to the benefits of section 5 of Act No. 4123, fulfillment of the mandate of
the law is necessary, this being a matter of public interest. Where both parties, as in this case, have
violated the law, this court must decline to extend the strong arm of equity, as neither party is entitled to
its aid. This is especially true in view of the findings of fact made by the Court of Industrial Relations
which we should not disturb.
We are not, to be sure, insensible to the argument that industrial disputes should be decided with an eye
on the welfare of the working class, who, in the interlay of economic forces, is said to find itself in the
"end of the stick." In the case at bar, however, we find no reason for disturbing the action taken by the
respondent Court of Industrial Relations, which is a special court enjoined to "act according to justice and
equity and substantial merits of the case, without regard to technicalities or legal forms and shall not be
bound by any technical rules of legal evidence but may inform its mind in such manner as it may deem
just and equitable" (sec. 20, Commonwealth Act No. 103).
The petition is dismissed, without pronouncement regarding Costs. So ordered.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-64313 January 17, 1985

NATIONAL HOUSING CORPORATION, petitioner,

vs.
BENJAMIN JUCO AND THE NATIONAL LABOR RELATIONS COMMISSION, respondents.

Government Corporate Counsel for petitioner.

Amante A. Pimentel for respondents.

GUTIERREZ, JR., J.:

Are employees of the National Housing Corporation (NHC) covered by the Labor Code or by laws and
regulations governing the civil service?

The background facts of this case are stated in the respondent-appellee's brief as follows:

The records reveal that private respondent (Benjamin C. Juco) was a project engineer of
the National Housing Corporation (NHC) from November 16, 1970 to May 14, 1975. For
having been implicated in a crime of theft and/or malversation of public funds involving
214 pieces of scrap G.I. pipes owned by the corporation which was allegedly committed
on March 5, 1975. Juco's services were terminated by (NHC) effective as of the close of
working hours on May 14, 1975. On March 25, 1977 he filed a complaint for illegal
dismissal against petitioner (NHC) with Regional Office No. 4, Department of Labor
(now Ministry of Labor and Employment) docketed as R04-3-3309-77 (Annex A,
Petition). The said complaint was certified by Regional Branch No. IV of the NLRC for
compulsory arbitration where it was docketed as Case No. RB-IV-12038-77 and assigned
to Labor Arbiter Ernilo V. Pealosa. The latter conducted the hearing. By agreement of
the parties, the case was submitted for resolution upon submission of their respective
position papers. Private respondent (Juco) submitted his position paper on July 15, 1977.
He professed innocence of the criminal acts imputed against him contending "that he was
dismissed based on purely fabricated charges purposely to harass him because he stood as
a witness in the theft case filed against certain high officials of the respondent's
establishment" (NHC) and prayed for 'his immediate reinstatement to his former position
in the (NHC) without loss of seniority rights and the consequent payment of his will back
wages plus all the benefits appertaining thereto. On July 28, 1977, the NHC also filed its
position paper alleging that the Regional Office Branch IV, Manila, NLRC, "is without
authority to entertain the case for lack of jurisdiction, considering that the NHC is a
government owned and controlled corporation; that even assuming that this case falls
within the jurisdiction of this Office, respondent firm (now petitioner) maintains that
respondent (Juco), now private respondent, was separated from the service for valid and
justified reasons, i.e., for having sold company properties consisting of 214 pieces of
 scrap G.I. pipes at a junk shop in Alabang, Muntinlupa, Metro Manila, and thereafter
appropriating the proceeds thereof to his own benefit."

The pertinent portion of the decision of respondent National Labor Relations Commission (NLRC) reads:

The fact that in the early case of Fernandez v. Cedro (NLRC Case No. 201165-74, May
19, 1975) the Commission, (Second Division) ruled that the respondent National Housing
Corporation is a government-owned or controlled corporation does not preclude us from
later taking a contrary stand if by doing so the ends of justice could better be served.

For although adherence to precedents (stare decisis) is a sum formula for achieving
uniformity of action and conducive to the smooth operation of an office, Idolatrous
reverence for precedents which have outlived their validity and usefulness retards
progress and should therefore be avoided. In fact, even courts do reverse themselves for
reasons of justice and equity. This Commission as an Administrative body performing
quasi judicial function is no exception.

WHEREFORE, in the light of the foregoing, the decision appealed from is hereby, set
aside. In view, however, of the fact that the Labor Arbiter did not resolve the issue of
illegal dismissal we have opted to remand this case to the Labor Arbiter a quo for
resolution of the aforementioned issue.

The NHC is a one hundred percent (100%) government-owned corporation organized in accordance with
Executive Order No. 399, the Uniform Charter of Government Corporations, dated January 5, 1951. Its
shares of stock are owned by the Government Service Insurance System the Social Security System, the
Development Bank of the Philippines, the National Investment and Development Corporation, and the
People's Homesite and Housing Corporation. Pursuant to Letter of Instruction No. 118, the capital stock
of NHC was increased from P100 million to P250 million with the five government institutions above
mentioned subscribing in equal proportion to the increased capital stock. The NHC has never had any
private stockholders. The government has been the only stockholder from its creation to the present.

There should no longer be any question at this time that employees of government-owned or controlled
corporations are governed by the civil service law and civil service rules and regulations.

Section 1, Article XII-B of the Constitution specifically provides:

The Civil Service embraces every branch, agency, subdivision, and instrumentality of the
Government, including every government-owned or controlled corporation. ...

The 1935 Constitution had a similar provision in its Section 1, Article XI I which stated:

A Civil Service embracing all branches and subdivisions of the Government shall be
provided by law.

The inclusion of "government-owned or controlled corporations" within the embrace of the civil service
shows a deliberate effort of the framers to plug an earlier loophole which allowed government-owned or
controlled corporations to avoid the full consequences of the an encompassing coverage of the civil
service system. The same explicit intent is shown by the addition of "agency" and "instrumentality" to
branches and subdivisions of the Government. All offices and firms of the government are covered.
The amendments introduced in 1973 are not Idle exercises or a meaningless gestures. They carry the
strong message that t civil service coverage is broad and an- embracing insofar as employment in the
government in any of its governmental or corporate arms is concerned.

The constitutional provision has been implemented by statute. Presidential Decree No. 807 is unequivocal
that personnel of government-owned or controlled corporations belong to the civil service and are subject
to civil service requirements.

It provides:

SEC. 56. Government-owned or Controlled Corporations Personnel. All permanent

personnel of government-owned or controlled corporations whose positions are now
embraced in the civil service shall continue in the service until they have been given a
chance to qualify in an appropriate examination, but in the meantime, those who do not
possess the appropriate civil service eligibility shag not be promoted until they qualify in
an appropriate civil service examination. Services of temporary personnel may be
terminated any time.

The very Labor Code, P. D. No. 442 as amended, which the respondent NLRC wants to apply in its
entirety to the private respondent provides:

ART. 277. Government employees. The terms and conditions of employment of all
government employees, including employees of government-owned and controlled
corporations shall be governed by the Civil Service Law, rules and regulations. Their
salaries shall be standardized by the National Assembly as provided for in the New
Constitution. However, there shall be reduction of existing wages, benefits and other
terms and conditions of employment being enjoyed by them at the time of the adoption of
the Code.

Our decision in Alliance of Government Workers, et al v. Honorable Minister of Labor and Employment
et all. (124 SCRA 1) gives the background of the amendment which includes government-owned or
controlled corporations in the embrace of the civil service.

We stated:

Records of the 1971 Constitutional Convention show that in the deliberation held relative
to what is now Section 1(1), Article XII-B, supra, the issue of the inclusion of
government-owned or controlled corporations figured prominently.

The late delegate Roberto S. Oca, a recognized labor leader, vehemently objected to the
inclusion of government-owned or controlled corporations in the Civil Service. He
argued that such inclusion would put asunder the right of workers in government
corporations, recognized in jurisprudence under the 1935 Constitution, to form and join
labor unions for purposes of collective bargaining with their employers in the same
manner as in the private section (see: records of 1971 Constitutional Convention).

In contrast, other labor experts and delegates to the 1971 Constitutional Convention
enlightened the members of the Committee on Labor on the divergent situation of
government workers under the 1935 Constitution, and called for its rectification. Thus, in
a Position Paper dated November 22, 197 1, submitted to the Committee on Labor, 1971
Constitutional Convention, then Acting Commissioner of Civil Service Epi Rey
Pangramuyen declared:

It is the stand, therefore, of this Commission that by reason of the nature

of the public employer and the peculiar character of the public service, it
must necessary regard the right to strike given to unions in private
industry as not applying to public employees and civil service
employees. It has been stated that the Government, in contrast to the
private employer, protects the interests of all people in the public service,
and that accordingly, such conflicting interests as are present in private
labor relations could not exist in the relations between government and
those whom they employ.

Moreover, determination of employment conditions as well as

supervision of the management of the public service is in the hands of
legislative bodies. It is further emphasized that government agencies in
the performance of their duties have a right to demand undivided
allegiance from their workers and must always maintain a pronounced
esprit de corps or firm discipline among their staff members. It would be
highly incompatible with these requirements of the public service, if
personnel took orders from union leaders or put solidarity with members
of the working class above solidarity with the Government. This would
be inimical to the public interest.

Moreover, it is asserted that public employees by joining labor unions

may be compelled to support objectives which are political in nature and
thus jeopardize the fundamental principle that the governmental
machinery must be impartial and non-political in the sense of party
politics. (See: Records of 1971 Constitutional Convention).

Similar, Delegate Leandro P. Garcia, expressing for the inclusion of government-owned

or controlled corporations in the Civil Service, argued:

It is meretricious to contend that because Government-owned or

controlled corporations yield profits, their employees are entitled to
better wages and fringe benefits than employees of Government other
than Government-owned and controlled corporations which are not
making profits. There is no gainsaying the fact that the capital they use is
the people's money. (see: Records of the 1971 Constitutional
Convention).

Summarizing the deliberations of the 1971 Constitutional Convention on the inclusion of

Government-owned or controlled corporation Dean Joaquin G. Bernas, SJ., of the Ateneo
de Manila University Professional School of Law, stated that government-owned
corporations came under attack as g cows of a privileged few enjoying salaries far higher
than their counterparts in the various branches of government, while the capital of these
corporations belongs to the Government and government money is pumped into them
whenever on the brink of disaster, and they should therefore come under the strict
surveillance of the Civil Service System. (Bernas, The 1973 Philippine Constitution,
Notes and Cases, 1974 ed., p. 524).
Applying the pertinent provisions of the Constitution, the Labor Code as amended, and the Civil Service
Decree as amended and the precedent in the Alliance of Government Workers decision, it is clear that the
petitioner National Housing Corporation comes under the jurisdiction of the Civil Service Commission,
not the Ministry of Labor and Employment.

This becomes more apparent if we consider the fact that the NHC performs governmental functions and
not proprietary ones.

The NHC was organized for the governmental objectives stated in its amended articles of incorporation as
follows:

SECOND: That the purpose for which the corporation is organized is to assist and carry
out the coordinated massive housing program of the government, principally but not
limited to low-cost housing with the integration cooperation and assistance of all
governmental agencies concerned, through the carrying on of any or all the following
activities:

l) The acquisition, development or reclamation of lands for the purpose of construction

and building therein preferably low-cost housing so as to provide decent and durable
dwelling for the greatest number of inhabitants in the country;

2) The promotion and development of physical social and economic community growth
through the establishment of general physical plans for urban, suburban and metropolitan
areas to be characterized by efficient land use patterns;

3) The coordination and implementation of all projects of the government for the
establishment of nationwide and massive low cost housing;

4) The undertaking and conducting of research and technical studies of the development
and promotion of construction of houses and buildings of sound standards of design
liability, durability, safety, comfort and size for improvement of the architectural and
engineering designs and utility of houses and buildings with the utilization of new and/or
native materials economics in material and construction, distribution, assembly and
construction and of applying advanced housing and building technology.

5) Construction and installation in these projects of low-cost housing privately or

cooperatively owned water and sewerage system or waste disposal facilities, and the
formulations of a unified or officially coordinated urban transportation system as a part of
a comprehensive development plan in these areas.

The petitioner points out that it was established as an instrumentality of the government to accomplish
governmental policies and objectives and extend essential services to the people. It would be incongruous
if employees discharging essentially governmental functions are not covered by the same law and rules
which govern those performing other governmental functions. If government corporations discharging
proprietary functions now belong to the civil service with more reason should those performing
governmental functions be governed by civil service law.

The respondent NLRC cites a 1976 opinion of the Secretary of Justice which holds that the phrase
"government-owned or controlled corporations" in Section 1, Article XII-B of the Constitution
contemplates only those government-owned or controlled corporations created by special law. The
opinion states that since the Constitution provides for the organization or regulation of private
corporations only by "general law", expressly excluding government-owned or controlled corporations, it
follows that whenever the Constitution mentions government-owned or controlled corporations, it must
refer to those created by special law. P.D. No. 868 which repeals all charters, laws, decrees, rules, and
provisions exempting any branch, agency, subdivision, or instrumentality of the government, including
government- owned or controlled corporations from the civil service law and rules is also cited to show
that corporations not governed by special charters or laws are not to be brought within civil service
coverage. The discussions in the Constitutional Convention are also mentioned. It appears that at the time
the Convention discussed government-owned or controlled corporations, all such corporations were
organized only under special laws or charters.

The fact that "private" corporations owned or controlled by the government may be created by special
charter does not mean that such corporations not created by special law are not covered by the civil
service. Nor does the decree repealing all charters and special laws granting exemption from the civil
service law imply that government corporations not created by special law are exempt from civil service
coverage. These charters and statutes are the only laws granting such exemption and, therefore, they are
the only ones which could be repealed. There was no similar exempting provision in the general law
which called for repeal. And finally, the fact that the Constitutional Convention discussed only
corporations created by special law or charter cannot be an argument to exclude petitioner NHC from
civil service coverage. As stated in the cited speech delivered during the convention sessions of March 9,
1972, all government corporations then in existence were organized under special laws or charters. The
convention delegates could not possibly discuss government-owned or controlled corporations which
were still non-existent or about whose existence they were unaware.

Section I of Article XII-B, Constitution uses the word "every" to modify the phrase "government-owned
or controlled corporation."

"Every" means each one of a group, without exception It means all possible and all taken one by one. Of
course, our decision in this case refers to a corporation created as a government-owned or controlled
entity. It does not cover cases involving private firms taken over by the government in foreclosure or
similar proceedings. We reserve judgment on these latter cases when the appropriate controversy is
brought to this Court.

The infirmity of the respondents' position lies in its permitting a circumvention or emasculation of Section
1, Article XII-B of the Constitution It would be possible for a regular ministry of government to create a
host of subsidiary corporations under the Corporation Code funded by a willing legislature. A
government-owned corporation could create several subsidiary corporations. These subsidiary
corporations would enjoy the best of two worlds. Their officials and employees would be privileged
individuals, free from the strict accountability required by the Civil Service Decree and the regulations of
the Commission on Audit. Their incomes would not be subject to the competitive restraints of the open
market nor to the terms and conditions of civil service employment. Conceivably, all government-owned
or controlled corporations could be created, no longer by special charters, but through incorporation under
the general law. The constitutional amendment including such corporations in the embrace of the civil
service would cease to have application. Certainly, such a situation cannot be allowed to exist.

WHEREFORE, the petition is hereby GRANTED. The questioned decision of the respondent National
Labor Relations Commission is SET ASIDE. The decision of the Labor Arbiter dismissing the case
before it for lack of jurisdiction is REINSTATED.

SO ORDERED.
Fernando, C.J., Teehankee, Makasiar, Aquino, Concepcion, Jr., Melencio-Herrera, Plana, Escolin,
Relova, De la Fuente and Cuevas, JJ., concur.

Separate Opinions

ABAD SANTOS, J., dissenting:

It was I, as Secretary of Justice, who issued Opinion No. 62, series of 1976, for the Commissioner of
Civil Service who wanted to know the scope of the constitutional provisions on the Civil Service in
respect of government-owned or controlled corporations. In response I opined, for the reasons stated
therein, that only those corporations created by special law are contemplated.

In the case at bar the National Housing Corporation was not created by special law; it was organized
pursuant to the Corpotation Law Act No. 1459 entitled, AN ACT PROVIDING FOR THE
FORMATION AND ORGANIZATION OF CORPORATIONS, DEFINING THEIR POWERS, FIXING
THE DUTIES OF DIRECTORS AND OTHER OFFICERS THEREOF, DECLARING THE RIGHTS
AND LIABILITIES OF SHAREHOLDERS AND MEMBERS, PRESCRIBING THE CONDITIONS
UNDER WHICH SUCH CORPORATIONS MAY TRANSACT BUSINESS. [Act No. 1459 has been
replaced by Batas Pambansa Blg. 68 known as The New Corporation Code.] In the fight of my opinion,
the National Housing Corporation is not covered by the Civil Service provisions of the Constitution.
Hence I dissent.

Is the National Housing Corporation covered by the Labor Code? I am not prepared to answer this
question at this time. I do wish to emphasize that whether or not a corporation is "government-owned or
controlled" depends upon the purpose of the inquiry. A corporation may be "government-owned or
controlled" for one purpose but not for another. In other words, it is not possible to broadly categorize a
corporation as government-owned or controlled."

It may be asked, if the National Housing Corporation is not covered by the Civil Service should it not be
covered instead by the Labor Code? My answer is, not necessarily. For it may well be that the National
Housing Corporation is in limbo.

The following corporations (the list is not exhaustive) appear to be "government-owned or controlled" not
by virtue of foreclosure or similar proceedings:

Human Settlements Development Corporation

Nayon Filipino Foundation, Inc.

Philippine Aero Space Development Corporation

Philippine Associated Smelting and Refining Corporation

 Petrophil Corporation Petron TBA Corporation

Philippine National Oil Co. Food Terminal Inc.

Republic Planters Bank

QUARE: Is this Court ready to hold that each and everyone of the above-named corporation is
government-owned or controlled for Civil Service purposes?

Separate Opinions

ABAD SANTOS, J., dissenting:

It was I, as Secretary of Justice, who issued Opinion No. 62, series of 1976, for the Commissioner of
Civil Service who wanted to know the scope of the constitutional provisions on the Civil Service in
respect of government-owned or controlled corporations. In response I opined, for the reasons stated
therein, that only those corporations created by special law are contemplated.

In the case at bar the National Housing Corporation was not created by special law; it was organized
pursuant to the Corpotation Law Act No. 1459 entitled, AN ACT PROVIDING FOR THE
FORMATION AND ORGANIZATION OF CORPORATIONS, DEFINING THEIR POWERS, FIXING
THE DUTIES OF DIRECTORS AND OTHER OFFICERS THEREOF, DECLARING THE RIGHTS
AND LIABILITIES OF SHAREHOLDERS AND MEMBERS, PRESCRIBING THE CONDITIONS
UNDER WHICH SUCH CORPORATIONS MAY TRANSACT BUSINESS. [Act No. 1459 has been
replaced by Batas Pambansa Blg. 68 known as The New Corporation Code.] In the fight of my opinion,
the National Housing Corporation is not covered by the Civil Service provisions of the Constitution.
Hence I dissent.

Is the National Housing Corporation covered by the Labor Code? I am not prepared to answer this
question at this time. I do wish to emphasize that whether or not a corporation is "government-owned or
controlled" depends upon the purpose of the inquiry. A corporation may be "government-owned or
controlled" for one purpose but not for another. In other words, it is not possible to broadly categorize a
corporation as government-owned or controlled."

It may be asked, if the National Housing Corporation is not covered by the Civil Service should it not be
covered instead by the Labor Code? My answer is, not necessarily. For it may well be that the National
Housing Corporation is in limbo.

The following corporations (the list is not exhaustive) appear to be "government-owned or controlled" not
by virtue of foreclosure or similar proceedings:

Human Settlements Development Corporation

Nayon Filipino Foundation, Inc.

 Philippine Aero Space Development Corporation

Philippine Associated Smelting and Refining Corporation

Petrophil Corporation Petron TBA Corporation

Philippine National Oil Co. Food Terminal Inc.

Republic Planters Bank

QUARE: Is this Court ready to hold that each and everyone of the above-named corporation is
government-owned or controlled for Civil Service purposes?
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-69870 November 29, 1988

NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L. PEREZ, petitioners,

vs.
THE HONORABLE THIRD DIVISION, NATIONAL LABOR RELATIONS COMMISSION,
MINISTRY OF LABOR AND EMPLOYMENT, MANILA AND EUGENIA C.
CREDO, respondents.

G.R. No. 70295 November 29,1988

EUGENIA C. CREDO, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, NATIONAL SERVICES CORPORATION
AND ARTURO L. PEREZ, respondents.

The Chief Legal Counsel for respondents NASECO and Arturo L. Perez.

Melchor R. Flores for petitioner Eugenia C. Credo.

PADILLA, J.:

Consolidated special civil actions for certiorari seeking to review the decision * of the Third Division,
National Labor Relations Commission in Case No. 11-4944-83 dated 28 November 1984 and its
resolution dated 16 January 1985 denying motions for reconsideration of said decision.

Eugenia C. Credo was an employee of the National Service Corporation (NASECO), a domestic
corporation which provides security guards as well as messengerial, janitorial and other similar manpower
services to the Philippine National Bank (PNB) and its agencies. She was first employed with NASECO
as a lady guard on 18 July 1975. Through the years, she was promoted to Clerk Typist, then Personnel
Clerk until she became Chief of Property and Records, on 10 March 1980. 1

Sometime before 7 November 1983, Credo was administratively charged by Sisinio S. Lloren, Manager
of Finance and Special Project and Evaluation Department of NASECO, stemming from her non-
compliance with Lloren's memorandum, dated 11 October 1983, regarding certain entry procedures in the
company's Statement of Billings Adjustment. Said charges alleged that Credo "did not comply with
Lloren's instructions to place some corrections/additional remarks in the Statement of Billings
Adjustment; and when [Credo] was called by Lloren to his office to explain further the said instructions,
[Credo] showed resentment and behaved in a scandalous manner by shouting and uttering remarks of
disrespect in the presence of her co-employees." 2
On 7 November 1983, Credo was called to meet Arturo L. Perez, then Acting General Manager of
NASECO, to explain her side before Perez and NASECO's Committee on Personnel Affairs in connection
with the administrative charges filed against her. After said meeting, on the same date, Credo was placed
on "Forced Leave" status for 1 5 days, effective 8 November 1983. 3

Before the expiration of said 15-day leave, or on 18 November 1983, Credo filed a complaint, docketed as
Case No. 114944-83, with the Arbitration Branch, National Capital Region, Ministry of Labor and
Employment, Manila, against NASECO for placing her on forced leave, without due process. 4

Likewise, while Credo was on forced leave, or on 22 November 1983, NASECO's Committee on
Personnel Affairs deliberated and evaluated a number of past acts of misconduct or infractions attributed
to her. 5 As a result of this deliberation, said committee resolved:

1. That, respondent [Credo] committed the following offenses in the Code of Discipline,
viz:

OFFENSE vs. Company Interest & Policies

No. 3 Any discourteous act to customer, officer and employee of client company or
officer of the Corporation.

OFFENSE vs. Public Moral

No. 7 Exhibit marked discourtesy in the course of official duties or use of profane or
insulting language to any superior officer.

OFFENSE vs. Authority

No. 3 Failure to comply with any lawful order or any instructions of a superior officer.

2. That, Management has already given due consideration to respondent's [Credo]

scandalous actuations for several times in the past. Records also show that she was
reprimanded for some offense and did not question it. Management at this juncture, has
already met its maximum tolerance point so it has decided to put an end to respondent's
[Credo] being an undesirable employee. 6

The committee recommended Credo's termination, with forfeiture of benefits. 7

On 1 December 1983, Credo was called age to the office of Perez to be informed that she was being
charged with certain offenses. Notably, these offenses were those which NASECO's Committee on
Personnel Affairs already resolved, on 22 November 1983 to have been committed by Credo.

In Perez's office, and in the presence of NASECO's Committee on Personnel Affairs, Credo was made to
explain her side in connection with the charges filed against her; however, due to her failure to do
so, 8 she was handed a Notice of Termination, dated 24 November 1983, and made effective 1 December
1983. 9 Hence, on 6 December 1983, Credo filed a supplemental complaint for illegal dismissal in Case
No. 11-4944-83, alleging absence of just or authorized cause for her dismissal and lack of opportunity to
be heard. 10
After both parties had submitted their respective position papers, affidavits and other documentary
evidence in support of their claims and defenses, on 9 May 1984, the labor arbiter rendered a decision: 1)
dismissing Credo's complaint, and 2) directing NASECO to pay Credo separation pay equivalent to one
half month's pay for every year of service. 11

Both parties appealed to respondent National Labor Relations Commission (NLRC) which, on 28
November 1984, rendered a decision: 1) directing NASECO to reinstate Credo to her former position, or
substantially equivalent position, with six (6) months' backwages and without loss of seniority rights and
other privileges appertaining thereto, and 2) dismissing Credo's claim for attorney's fees, moral and
exemplary damages. As a consequence, both parties filed their respective motions for
reconsideration, 12 which the NLRC denied in a resolution of 16 January 1985. 13

Hence, the present recourse by both parties. In G.R. No. 68970, petitioners challenge as grave abuse of
discretion the dispositive portion of the 28 November 1984 decision which ordered Credo's reinstatement
with backwages. 14 Petitioners contend that in arriving at said questioned order, the NLRC acted with
grave abuse of discretion in finding that: 1) petitioners violated the requirements mandated by law on
termination, 2) petitioners failed in the burden of proving that the termination of Credo was for a valid or
authorized cause, 3) the alleged infractions committed by Credo were not proven or, even if proved, could
be considered to have been condoned by petitioners, and 4) the termination of Credo was not for a valid
or authorized cause. 15

On the other hand, in G.R. No. 70295, petitioner Credo challenges as grave abuse of discretion the
dispositive portion of the 28 November 1984 decision which dismissed her claim for attorney's fees,
moral and exemplary damages and limited her right to backwages to only six (6) months. 16

As guidelines for employers in the exercise of their power to dismiss employees for just causes, the law
provides that:

Section 2. Notice of dismissal. Any employer who seeks to dismiss a worker shall
furnish him a written notice stating the particular acts or omission constituting the
grounds for his dismissal.

xxx xxx xxx

Section 5. Answer and Hearing. The worker may answer the allegations stated against
him in the notice of dismissal within a reasonable period from receipt of such notice. The
employer shall afford the worker ample opportunity to be heard and to defend himself
with the assistance of his representative, if he so desires.

Section 6. Decision to dismiss. The employer shall immediately notify a worker in

writing of a decision to dismiss him stating clearly the reasons therefor. 17

These guidelines mandate that the employer furnish an employee sought to be dismissed two (2) written
notices of dismissal before a termination of employment can be legally effected. These are the notice
which apprises the employee of the particular acts or omissions for which his dismissal is sought and the
subsequent notice which informs the employee of the employer's decision to dismiss him.

Likewise, a reading of the guidelines in consonance with the express provisions of law on protection to
labor 18(which encompasses the right to security of tenure) and the broader dictates of procedural due
process necessarily mandate that notice of the employer's decision to dismiss an employee, with reasons
therefor, can only be issued after the employer has afforded the employee concerned ample opportunity to
be heard and to defend himself.

In the case at bar, NASECO did not comply with these guidelines in effecting Credo's dismissal.
Although she was apprised and "given the chance to explain her side" of the charges filed against her, this
chance was given so perfunctorily, thus rendering illusory Credo's right to security of tenure. That Credo
was not given ample opportunity to be heard and to defend herself is evident from the fact that the
compliance with the injunction to apprise her of the charges filed against her and to afford her a chance to
prepare for her defense was dispensed in only a day. This is not effective compliance with the legal
requirements aforementioned.

The fact also that the Notice of Termination of Credo's employment (or the decision to dismiss her) was
dated 24 November 1983 and made effective 1 December 1983 shows that NASECO was already bent on
terminating her services when she was informed on 1 December 1983 of the charges against her, and that
any hearing which NASECO thought of affording her after 24 November 1983 would merely be pro
forma or an exercise in futility.

Besides, Credo's mere non-compliance with Lorens memorandum regarding the entry procedures in the
company's Statement of Billings Adjustment did not warrant the severe penalty of dismissal of the NLRC
correctly held that:

... on the charge of gross discourtesy, the CPA found in its Report, dated 22 November
1983 that, "In the process of her testimony/explanations she again exhibited a conduct
unbecoming in front of NASECO Officers and argued to Mr. S. S. Lloren in a sarcastic
and discourteous manner, notwithstanding, the fact that she was inside the office of the
Acctg. General Manager." Let it be noted, however, that the Report did not even describe
how the so called "conduct unbecoming" or "discourteous manner" was done by
complainant. Anent the "sarcastic" argument of complainant, the purported
transcript 19 of the meeting held on 7 November 1983 does not indicate any sarcasm on
the part of complainant. At the most, complainant may have sounded insistent or
emphatic about her work being more complete than the work of Ms. de Castro, yet, the
complaining officer signed the work of Ms. de Castro and did not sign hers.

As to the charge of insubordination, it may be conceded, albeit unclear, that complainant

failed to place same corrections/additional remarks in the Statement of Billings
Adjustments as instructed. However, under the circumstances obtaining, where
complainant strongly felt that she was being discriminated against by her superior in
relation to other employees, we are of the considered view and so hold, that a reprimand
would have sufficed for the infraction, but certainly not termination from services. 20

As this Court has ruled:

... where a penalty less punitive would suffice, whatever missteps may be committed by
labor ought not to be visited with a consequence so severe. It is not only because of the
law's concern for the working man. There is, in addition, his family to consider.
Unemployment brings untold hardships and sorrows on those dependent on the wage-
earner. 21
Of course, in justifying Credo's termination of employment, NASECO claims as additional lawful causes
for dismissal Credo's previous and repeated acts of insubordination, discourtesy and sarcasm towards her
superior officers, alleged to have been committed from 1980 to July 1983. 22

If such acts of misconduct were indeed committed by Credo, they are deemed to have been condoned by
NASECO. For instance, sometime in 1980, when Credo allegedly "reacted in a scandalous manner and
raised her voice" in a discussion with NASECO's Acting head of the Personnel Administration 23 no
disciplinary measure was taken or meted against her. Nor was she even reprimanded when she allegedly
talked 'in a shouting or yelling manner" with the Acting Manager of NASECO's Building Maintenance
and Services Department in 1980 24 or when she allegedly "shouted" at NASECO's Corporate Auditor "in
front of his subordinates displaying arrogance and unruly behavior" in 1980, or when she allegedly
shouted at NASECO's Internal Control Consultant in 1981. 25 But then, in sharp contrast to NASECO's
penchant for ignoring the aforesaid acts of misconduct, when Credo committed frequent tardiness in
August and September 1983, she was reprimanded. 26

Even if the allegations of improper conduct (discourtesy to superiors) were satisfactorily proven,
NASECO's condonation thereof is gleaned from the fact that on 4 October 1983, Credo was given a
salary adjustment for having performed in the job "at least [satisfactorily]" 27 and she was then rated
"Very Satisfactory" 28as regards job performance, particularly in terms of quality of work, quantity of
work, dependability, cooperation, resourcefulness and attendance.

Considering that the acts or omissions for which Credo's employment was sought to be legally terminated
were insufficiently proved, as to justify dismissal, reinstatement is proper. For "absent the reason which
gave rise to [the employee's] separation from employment, there is no intention on the part of the
employer to dismiss the employee concerned." 29 And, as a result of having been wrongfully dismissed,
Credo is entitled to three (3) years of backwages without deduction and qualification. 30

However, while Credo's dismissal was effected without procedural fairness, an award of exemplary
damages in her favor can only be justified if her dismissal was effected in a wanton, fraudulent,
oppressive or malevolent manner. 31 A judicious examination of the record manifests no such conduct on
the part of management. However, in view of the attendant circumstances in the case, i.e., lack of due
process in effecting her dismissal, it is reasonable to award her moral damages. And, for having been
compelled to litigate because of the unlawful actuations of NASECO, a reasonable award for attorney's
fees in her favor is in order.

In NASECO's comment 32 in G.R. No. 70295, it is belatedly argued that the NLRC has no jurisdiction to
order Credo's reinstatement. NASECO claims that, as a government corporation (by virtue of its being a
subsidiary of the National Investment and Development Corporation (NIDC), a subsidiary wholly owned
by the Philippine National Bank (PNB), which in turn is a government owned corporation), the terms and
conditions of employment of its employees are governed by the Civil Service Law, rules and regulations.
In support of this argument, NASECO cites National Housing Corporation vs. JUCO, 33where this Court
held that "There should no longer be any question at this time that employees of government-owned or
controlled corporations are governed by the civil service law and civil service rifles and regulations."

It would appear that, in the interest of justice, the holding in said case should not be given retroactive
effect, that is, to cases that arose before its promulgation on 17 January 1985. To do otherwise would be
oppressive to Credo and other employees similarly situated, because under the same 1973 Constitution
,but prior to the ruling in National Housing Corporation vs. Juco, this Court had recognized the
applicability of the Labor Code to, and the authority of the NLRC to exercise jurisdiction over, disputes
involving terms and conditions of employment in government owned or controlled corporations, among
them, the National Service Corporation (NASECO).<re||an1w> 34

Furthermore, in the matter of coverage by the civil service of government-owned or controlled

corporations, the 1987 Constitution starkly varies from the 1973 Constitution, upon which National
Housing Corporation vs. Juco is based. Under the 1973 Constitution, it was provided that:

The civil service embraces every branch, agency, subdivision, and instrumentality of the
Government, including every government-owned or controlled corporation. ... 35

On the other hand, the 1987 Constitution provides that:

The civil service embraces all branches, subdivisions, instrumentalities, and agencies of
the Government, including government-owned or controlled corporations with original
charter. 36(Emphasis supplied)

Thus, the situations sought to be avoided by the 1973 Constitution and expressed by the Court in the
National Housing . Corporation case in the following manner

The infirmity of the respondents' position lies in its permitting a circumvention or

emasculation of Section 1, Article XII-B of the constitution. It would be possible for a
regular ministry of government to create a host of subsidiary corporations under the
Corporation Code funded by a willing legislature. A government-owned corporation
could create several subsidiary corporations. These subsidiary corporations would enjoy
the best of two worlds. Their officials and employees would be privileged individuals,
free from the strict accountability required by the Civil Service Decree and the
regulations of the Commission on Audit. Their incomes would not be subject to the
competitive restrains of the open market nor to the terms and conditions of civil service
employment. Conceivably, all government-owned or controlled corporations could be
created, no longer by special charters, but through incorporations under the general law.
The Constitutional amendment including such corporations in the embrace of the civil
service would cease to have application. Certainly, such a situation cannot be allowed to
exist. 37

appear relegated to relative insignificance by the 1987 Constitutional provision that the Civil Service
embraces government-owned or controlled corporations with original charter; and, therefore, by clear
implication, the Civil Service does not include government-owned or controlled corporations which are
organized as subsidiaries of government-owned or controlled corporations under the general corporation
law.

The proceedings in the 1986 Constitutional Commission also shed light on the Constitutional intent and
meaning in the use of the phrase "with original charter." Thus

THE PRESIDING OFFICER (Mr. Trenas) Commissioner Romulo is

recognized.

MR. ROMULO. I beg the indulgence of the Committee. I was reading

the wrong provision.

I refer to Section 1, subparagraph I which reads:

The Civil Service embraces all branches, subdivisions, instrumentalities, and agencies of
the government, including government-owned or controlled corporations.

My query: Is Philippine Airlines covered by this provision? MR. FOZ. Will the
Commissioner please state his previous question?

MR. ROMULO. The phrase on line 4 of Section 1, subparagraph 1,

under the Civil Service Commission, says: "including government-
owned or controlled corporations.' Does that include a corporation, like
the Philippine Airlines which is government-owned or controlled?

MR. FOZ. I would like to throw a question to the Commissioner. Is the

Philippine Airlines controlled by the government in the sense that the
majority of stocks are owned by the government?

MR. ROMULO. It is owned by the GSIS. So, this is what we might call
a tertiary corporation. The GSIS is owned by the government. Would this
be covered because the provision says "including government-owned or
controlled corporations."

MR. FOZ. The Philippine Airlines was established as a private

corporation. Later on, the government, through the GSIS, acquired the
controlling stocks. Is that not the correct situation?

MR. ROMULO. That is true as Commissioner Ople is about to explain.

There was apparently a Supreme Court decision that destroyed that
distinction between a government-owned corporation created under the
Corporation Law and a government-owned corporation created by its
own charter.

MR. FOZ. Yes, we recall the Supreme Court decision in the case of
NHA vs. Juco to the effect that all government corporations irrespective
of the manner of creation, whether by special charter or by the private
Corporation Law, are deemed to be covered by the civil service because
of the wide-embracing definition made in this section of the existing
1973 Constitution. But we recall the response to the question of
Commissioner Ople that our intendment in this provision is just to give a
general description of the civil service. We are not here to make any
declaration as to whether employees of government-owned or controlled
corporations are barred from the operation of laws, such as the Labor
Code of the Philippines.

MR. ROMULO. Yes.

MR. OPLE. May I be recognized, Mr. Presiding Officer, since my name

has been mentioned by both sides.

MR. ROMULO. I yield part of my time.

 THE PRESIDING OFFICER (Mr.Trenas). Commissioner Ople is
recognized.

MR. OPLE. In connection with the coverage of the Civil Service Law in
Section 1 (1), may I volunteer some information that may be helpful both
to the interpellator and to the Committee. Following the proclamation of
martial law on September 21, 1972, this issue of the coverage of the
Labor Code of the Philippines and of the Civil Service Law almost
immediately arose. I am, in particular, referring to the period following
the coming into force and effect of the Constitution of 1973, where the
Article on the Civil Service was supposed to take immediate force and
effect. In the case of LUZTEVECO, there was a strike at the time. This
was a government-controlled and government-owned corporation. I think
it was owned by the PNOC with just the minuscule private shares left.
So, the Secretary of Justice at that time, Secretary Abad Santos, and
myself sat down, and the result of that meeting was an opinion of the
Secretary of Justice which 9 became binding immediately on the
government that government corporations with original charters, such as
the GSIS, were covered by the Civil Service Law and corporations spun
off from the GSIS, which we called second generation corporations
functioning as private subsidiaries, were covered by the Labor Code.
Samples of such second generation corporations were the Philippine
Airlines, the Manila

Hotel and the Hyatt. And that demarcation worked very well. In fact, all of these
companies I have mentioned as examples, except for the Manila Hotel, had collective
bargaining agreements. In the Philippine Airlines, there were, in fact, three collective
bargaining agreements; one, for the ground people or the PALIA one, for the flight
attendants or the PASAC and one for the pilots of the ALPAC How then could a
corporation like that be covered by the Civil Service law? But, as the Chairman of the
Committee pointed out, the Supreme Court decision in the case of NHA vs. Juco unrobed
the whole thing. Accordingly, the Philippine Airlines, the Manila Hotel and the Hyatt are
now considered under that decision covered by the Civil Service Law. I also recall that in
the emergency meeting of the Cabinet convened for this purpose at the initiative of the
Chairman of the Reorganization Commission, Armand Fabella, they agreed to allow the
CBA's to lapse before applying the full force and effect of the Supreme Court decision.
So, we were in the awkward situation when the new government took over. I can agree
with Commissioner Romulo when he said that this is a problem which I am not exactly
sure we should address in the deliberations on the Civil Service Law or whether we
should be content with what the Chairman said that Section 1 (1) of the Article on the
Civil Service is just a general description of the coverage of the Civil Service and no
more.

Thank you, Mr. Presiding Officer.

MR. ROMULO. Mr. Presiding Officer, for the moment, I would be

satisfied if the Committee puts on records that it is not their intent by this
provision and the phrase "including government-owned or controlled
corporations" to cover such companies as the Philippine Airlines.
 MR. FOZ. Personally, that is my view. As a matter of fact, when this
draft was made, my proposal was really to eliminate, to drop from the
provision, the phrase "including government- owned or controlled
corporations."

MR. ROMULO. Would the Committee indicate that is the intent of this
provision?

MR. MONSOD. Mr. Presiding Officer, I do not think the Committee can
make such a statement in the face of an absolute exclusion of
government-owned or controlled corporations. However, this does not
preclude the Civil Service Law to prescribe different rules and
procedures, including emoluments for employees of proprietary
corporations, taking into consideration the nature of their operations. So,
it is a general coverage but it does not preclude a distinction of the rules
between the two types of enterprises.

MR. FOZ. In other words, it is something that should be left to the

legislature to decide. As I said before, this is just a general description
and we are not making any declaration whatsoever.

MR. MONSOD. Perhaps if Commissioner Romulo would like a

definitive understanding of the coverage and the Gentleman wants to
exclude government-owned or controlled corporations like Philippine
Airlines, then the recourse is to offer an amendment as to the coverage, if
the Commissioner does not accept the explanation that there could be a
distinction of the rules, including salaries and emoluments.

MR. ROMULO. So as not to delay the proceedings, I will reserve my

right to submit such an amendment.

xxx xxx xxx

THE PRESIDING OFFICE (Mr. Trenas) Commissioner Romulo is

recognized.

MR. ROMULO. On page 2, line 5, I suggest the following amendment

after "corporations": Add a comma (,) and the phrase EXCEPT THOSE
EXERCISING PROPRIETARY FUNCTIONS.

THE PRESIDING OFFICER (Mr. Trenas). What does the Committee

say?

SUSPENSION OF SESSION

MR. MONSOD. May we have a suspension of the session?

THE PRESIDING OFFICER (Mr. Trenas). The session is suspended.

 It was 7:16 p.m.

RESUMPTION OF SESSION

At 7:21 p.m., the session was resumed.

THE PRESIDING OFFICER (Mr. Trenas). The session is resumed.

Commissioner Romulo is recognized.

MR. ROMULO. Mr. Presiding Officer, I am amending my original proposed amendment

to now read as follows: "including government-owned or controlled corporations WITH
ORIGINAL CHARTERS." The purpose of this amendment is to indicate that
government corporations such as the GSIS and SSS, which have original charters, fall
within the ambit of the civil service. However, corporations which are subsidiaries of
these chartered agencies such as the Philippine Airlines, Manila Hotel and Hyatt are
excluded from the coverage of the civil service.

THE PRESIDING OFFICER (Mr. Trenas). What does the Committee

say?

MR. FOZ. Just one question, Mr. Presiding Officer. By the term
"original charters," what exactly do we mean?

MR. ROMULO. We mean that they were created by law, by an act of

Congress, or by special law.

MR. FOZ. And not under the general corporation law.

MR. ROMULO. That is correct. Mr. Presiding Officer.

MR. FOZ. With that understanding and clarification, the Committee

accepts the amendment.

MR. NATIVIDAD. Mr. Presiding officer, so those created by the general

corporation law are out.

MR. ROMULO. That is correct: 38

On the premise that it is the 1987 Constitution that governs the instant case because it is the Constitution
in place at the time of decision thereof, the NLRC has jurisdiction to accord relief to the parties. As an
admitted subsidiary of the NIDC, in turn a subsidiary of the PNB, the NASECO is a government-owned
or controlled corporation without original charter.

Dr. Jorge Bocobo, in his Cult of Legalism, cited by Mr. Justice Perfecto in his concurring opinion
in Gomez vs. Government Insurance Board (L-602, March 31, 1947, 44 O.G. No. 8, pp. 2687, 2694; also
published in 78 Phil. 221) on the effectivity of the principle of social justice embodied in the 1935
Constitution, said:
 Certainly, this principle of social justice in our Constitution as generously conceived and
so tersely phrased, was not included in the fundamental law as a mere popular gesture. It
was meant to (be) a vital, articulate, compelling principle of public policy. It should be
observed in the interpretation not only of future legislation, but also of all laws already
existing on November 15, 1935. It was intended to change the spirit of our laws, present
and future. Thus, all the laws which on the great historic event when the Commonwealth
of the Philippines was born, were susceptible of two interpretations strict or liberal,
against or in favor of social justice, now have to be construed broadly in order to promote
and achieve social justice. This may seem novel to our friends, the advocates of legalism
but it is the only way to give life and significance to the above-quoted principle of the
Constitution. If it was not designed to apply to these existing laws, then it would be
necessary to wait for generations until all our codes and all our statutes shall have been
completely charred by removing every provision inimical to social justice, before the
policy of social justice can become really effective. That would be an absurd conclusion.
It is more reasonable to hold that this constitutional principle applies to all legislation in
force on November 15, 1935, and all laws thereafter passed.

WHEREFORE, in view of the foregoing, the challenged decision of the NLRC is AFFIRMED with
modifications. Petitioners in G.R. No. 69870, who are the private respondents in G.R. No. 70295, are
ordered to: 1) reinstate Eugenia C. Credo to her former position at the time of her termination, or if such
reinstatement is not possible, to place her in a substantially equivalent position, with three (3) years
backwages, from 1 December 1983, without qualification or deduction, and without loss of seniority
rights and other privileges appertaining thereto, and 2) pay Eugenia C. Credo P5,000.00 for moral
damages and P5,000.00 for attorney's fees.

If reinstatement in any event is no longer possible because of supervening events, petitioners in G.R. No.
69870, who are the private respondents in G.R. No. 70295 are ordered to pay Eugenia C. Credo, in
addition to her backwages and damages as above described, separation pay equivalent to one-half month's
salary for every year of service, to be computed on her monthly salary at the time of her termination on 1
December 1983.

SO ORDERED.

Fernan, C.J., Melencio-Herrera, Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes, Grio-Aquino,
Medialdea and Regalado, JJ., concur.

Narvasa, J., is on leave.

Gutierrez, Jr., J., in the result.

Separate Opinions

CRUZ, J., concurring:

While concurring with Mr. Justice Padilla's well-researched ponencia, I have to express once again my
disappointment over still another avoidable ambiguity in the 1987 Constitution.

It is clear now from the debates of the Constitutional Commission that the government-owned or
controlled corporations included in the Civil Service are those with legislative charters. Excluded are its
subsidiaries organized under the Corporation Code.

If that was the intention, the logical thing, I should imagine, would have been to simply say so. This
would have avoided the suggestion that there are corporations with duplicate charters as distinguished
from those with original charters.

All charters are original regardless of source unless they are amended. That is the acceptable distinction.
Under the provision, however, the charter is still and always original even if amended as long it was
granted by the legislature.

It would have been clearer, I think, to say "including government owned or controlled corporations with
legislative charters." Why this thought did not occur to the Constitutional Commission places one again in
needless puzzlement.

Separate Opinions

CRUZ, J., concurring:

While concurring with Mr. Justice Padilla's well-researched ponencia, I have to express once again my
disappointment over still another avoidable ambiguity in the 1987 Constitution.

It is clear now from the debates of the Constitutional Commission that the government-owned or
controlled corporations included in the Civil Service are those with legislative charters. Excluded are its
subsidiaries organized under the Corporation Code.

If that was the intention, the logical thing, I should imagine, would have been to simply say so. This
would have avoided the suggestion that there are corporations with duplicate charters as distinguished
from those with original charters.

All charters are original regardless of source unless they are amended. That is the acceptable distinction.
Under the provision, however, the charter is still and always original even if amended as long it was
granted by the legislature.

It would have been clearer, I think, to say "including government owned or controlled corporations with
legislative charters." Why this thought did not occur to the Constitutional Commission places one again in
needless puzzlement.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 100947 May 31, 1993

PNOC ENERGY DEVELOPMENT CORPORATION and MARCELINO TONGCO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and MANUEL S. PINEDA, respondents.

Alikpala, Gomez & Associates Law Office for petitioners.

Filomeno A. Zieta for private respondent.

NARVASA, C.J.:

The applicability to private respondent Manuel S. Pineda of Section 66 of the Election Code is what is
chiefly involved in the case at bar. Said section reads as follows:

Sec. 66. Candidates holding appointive office or position. Any person holding a public
appointive office or position, including active members of the Armed Forces of the
Philippines, and officers and employees in government-owned or controlled corporations,
shall be considered ipso facto resigned from his office upon the filing of his certificate of
candidacy.

Manuel S. Pineda was employed with the Philippine National Oil Co.-Energy Development Corp.
(PNOC-EDC), as subsidiary of the Philippine National Oil Co., from September 17, 1981, when he was
hired as clerk, to January 26, 1989, when his employment was terminated. The events leading to his
dismissal from his job are not disputed.

In November, 1987, while holding the position of Geothermal Construction Secretary, Engineering and
Construction Department, at Tongonan Geothermal Project, Ormoc City, Pineda decided to run for
councilor of the Municipality of Kananga, Leyte, in the local elections scheduled in January, 1988, and
filed the corresponding certificate of candidacy for the position. Objection to Pineda's being a candidate
while retaining his job in the PNOC-EDC was shortly thereafter registered by Mayor Arturo Cornejos of
Kananga, Leyte. The mayor communicated with the PNOC-EDC thru Engr. Ernesto Patanao, Resident
Manager, Tongonan Geothermal Project to express the view that Pineda could not actively participate
in politics unless he officially resigned from PNOC-EDC. 1 Nothing seems to have resulted from this
protest.

The local elections in Leyte, scheduled for January, 1988, were reset to and held on February 1, 1988.
Pineda was among the official candidates voted for, and eventually proclaimed elected to, the office of
councilor. Some vacillation appears to have been evinced by Pineda at about this time. On February 8,
1988, he wrote to the COMELEC Chairman, expressing his desire to withdraw from the political contest
on account of what he considered to be election irregularities; 2 and on March 19, 1988, he wrote to the
Secretary of Justice seeking legal opinion on the question, among others, of whether or not he was
"considered automatically resigned upon . . . filing of . . . (his) certificate of candidacy," and whether or
not, in case he was elected, he could "remain appointed to any corporate offspring of a government-
owned or controlled corporation." 3 Nevertheless, Pineda took his oath of office in June, 1988 as
councilor-elect of the Municipality of Kananga, Leyte. 4 And despite so qualifying as councilor, and
assuming his duties as such, he continued working for PNOC-EDC as the latter's Geothermal
Construction Secretary, Engineering and Construction Department, at Tongonan Geothermal Project,
Ormoc City.

On June 7, 1988, Marcelino M. Tongco, Department Manager of the Engineering and Construction
Department, PNOC-EDC, addressed an inquiry to the latter's Legal Department regarding the status of
Manuel S. Pineda as employee in view of his candidacy for the office of municipal councilor. 5 In
response, the Legal Department rendered an opinion to the effect that Manuel S. Pineda should be
considered ipso facto resigned upon the filing of his Certificate of Candidacy in November, 1987, in
accordance with Section 66 of the Omnibus Election Code. 6

Pineda appealed the PNOC-EDC Legal Department's ruling to N.C. Vasquez, the Vice-President of
PNOC-EDC, on July 14, 1988. In his letter of appeal, 7 he invoked a "court ruling in the case of Caagusan
and Donato vs. PNOC-Exploration Corp. . . . (to the effect that) while the government-owned or
controlled corporations are covered by the Civil Service Law (as is taken to mean in Sec. 66 of the
Omnibus Election Code of 1985) (sic), the subsidiaries or corporate offsprings are not." In the same letter
he declared his wish to continue resign from his position as councilor/member of the Sangguniang Bayan.

He also wrote a letter dated October 1, 1988 to the Department of Local Government inquiring about the
status of his employment with PNOC-EDC in relation to his election as member of the Sangguniang
Bayan. He was advised by DLG Undersecretary Jacinto T. Rubillo, Jr., by letter dated March 31, 1989,
that there was no legal impediment to his continuing in his employment with PNOC-EDC while holding
at the same time the elective position of municipal councilor. Cited as basis by Undersecretary Rubillo
was Section 2(1) Article IX-B of the 1987 Constitution and this Court's ruling in NASECO vs. NLRC, 168
SCRA 122. Undersecretary Rubillo went on to say that Pineda could receive his per diems as municipal
councilor as well as the corresponding representation and transportation allowance [RATA] "provided the
PNOC-EDC charter does not provide otherwise and public shall not be prejudiced." 8

The PNOC-EDC did not, however, share the Undersecretary's views. On January 26, 1989, the PNOC-
EDC, through Marcelino Tongco (Manager, Engineering and Construction Department), notified Manuel
S. Pineda in writing (1) that after having given him "ample time" to make some major adjustments before
. . . separation from the company," his employment was being terminated pursuant to Section 66 of the
Omnibus Election Code, effective upon receipt of notice, and (2) that he was entitled to "proper
compensation" for the services rendered by him from the time he filed his certificate of candidacy until
his actual separation from the service. 9

On October 16, 1989, Pineda lodged a complaint for illegal dismissal in the Regional Arbitration Branch
No. VIII, NLRC, Tacloban City. Impleaded as respondents were the PNOC-EDC and the Manager of its
Engineering and Construction Department, Marcelino M. Tongco. 10

After due proceedings, Labor Arbiter Araceli H. Maraya, to whom the case was assigned, rendered a
decision on December 28, 1990, 11 declaring Manuel S. Pineda's dismissal from the service illegal, and
ordering his reinstatement to his former position without loss of seniority rights and payment of full back
wages corresponding to the period from his illegal dismissal up to the time of actual reinstatement. The
Arbiter pointed out that the ruling relied upon by PNOC-EDC to justify Pineda's dismissal from the
service, i.e., NHA v. Juco, 12 had already been abandoned; and that "as early as November 29, 1988," the
governing principle laid down by case law in light of Section 2 (1), Article IX-B of the 1987
Constitution 13 has been that government-owned or controlled corporations incorporated under the
Corporation Code, the general law as distinguished from those created by special charter are not
deemed to be within the coverage of the Civil Service Law, and consequently their employees, like those
of the PNOC-EDC, are subject to the provisions of the Labor Code rather than the Civil Service Law. 14

The PNOC-EDC filed an appeal with the National Labor Relations Commission. The latter dismissed the
appeal for lack of merit in a decision dated April 24, 1991. 15 PNOC-EDC sought reconsideration; 16 its
motion was denied by the Commission in a Resolution dated June 21, 1991. 17

It is this decision of April 24, 1991 and the Resolution of June 21, 1991 that the PNOC-EDC seeks to be
annulled and set aside in the special civil action for certiorari at bar. It contends that the respondent
Commission gravely abused its discretion:

1) when it ruled that Manuel S. Pineda was not covered by the Civil Service Rules when
he filed his candidacy for the 1988 local government elections in November 1987;

2) when it ruled that Pineda was not covered by the Omnibus Election Code at the time
he filed his certificate of candidacy for the 1988 local elections;

3) when it ruled that Pineda was illegally dismissed despite the fact that he was
considered automatically resigned pursuant to Section 66 of the Omnibus Election Code;
and

4) when it ruled that Pineda could occupy a local government position and be
simultaneously employed in a government-owned or controlled corporation, a situation
patently violative of the constitutional prohibition on additional compensation.

Acting on the petition, this Court issued a temporary restraining order enjoining the respondent NLRC
from implementing or enforcing its decision and resolution dated April 24, 1991 and June 21, 1991,
respectively.

In the comment required of him by the Court, the Solicitor General expressed agreement with the
respondent Commission's holding that Manuel Pineda had indeed been illegally separated from his
employment in the PNOC-EDC; in other words, that his running for public office and his election thereto
had no effect on his employment with the PNOC-EDC, a corporation not embraced within the Civil
Service.

Petitioner PNOC-EDC argues that at the time that Pineda filed his certificate of candidacy for municipal
councilor in November, 1987, the case law "applicable as far as coverage of government-owned or
controlled corporations are concerned . . . ( was to the following effect): 18

As correctly pointed out by the Solicitor General, the issue of jurisdiction had been
resolved in a string of cases starting with the National Housing Authority vs. Juco (134
SCRA 172) followed by Metropolitan Waterworks and Sewerage System
vs. Hernandez (143 SCRA 602) and the comparatively recent case of Quimpo
vs. Sandiganbayan (G.R. No. 72553, Dec. 2, 1986) in which this Court squarely ruled
 that PNOC subsidiaries, whether or not originally created as government-owned or
controlled corporations are governed by the Civil Service Law.

This doctrine, petitioner further argues, was not "automatically reversed" by the 1987 Constitution
because not "amended or repealed by the Supreme Court or the Congress;" 19 and this Court's decision in
November, 1988, in National Service Corporation vs. NLRC, supra 20 abandoning the Juco ruling
"cannot be given retroactive effect . . . (in view of ) the time-honored principle . . . that laws (judicial
decisions included) shall have no retroactive effect, unless the contrary is provided (Articles 4 and 8 of
the New Civil Code of the Philippines)."

Section 2 (1), Article IX of the 1987 Constitution provides as follows:

The civil service embraces all branches, subdivisions, instrumentalities, and agencies of
the Government, including government-owned or controlled corporations with original
charters.

Implicit in the provision is that government-owned or controlled corporations without original charters
i.e., organized under the general law, the Corporation Code are not comprehended within the Civil
Service Law. So has this Court construed the provision. 21

In National Service Corporation (NASECO), et al. v. NLRC, et al., etc., 22 decided on November 29, 1988,
it was ruled that the 1987 Constitution "starkly varies" from the 1973 charter upon which the Juco
doctrine rested in that unlike the latter, the present constitution qualifies the term, "government-owned
or controlled corporations," by the phrase, "with original charter;" hence, the clear implication is that the
Civil Service no longer includes government-owned or controlled corporations without original charters,
i.e., those organized under the general corporation law. 23 NASECO further ruled that the Juco ruling
should not apply retroactively, considering that prior to its promulgation on January 17, 1985, this Court
had expressly recognized the applicability of the Labor Code to government-owned or controlled
corporations. 24

Lumanta, et al. v. NLRC, et al., 25 decided on February 8, 1989, made the same pronouncement:
that Juco had been superseded by the 1987 Constitution for implicit in the language of Section 2 (1),
Article IX thereof, is the proposition that government-owned or controlled corporations without original
charter do not fall under the Civil Service Law but under the Labor Code.

And in PNOC-EDC v. Leogardo, etc., et al., 26 promulgated on July 5, 1989, this Court ruled that
conformably with the apparent intendment of the NASECO case, supra, since the PNOC-EDC, a
government-owned or controlled company had been incorporated under the general Corporation Law, its
employees are subject to the provisions of the Labor Code.

It is thus clear that the Juco doctrine prevailing at the time of the effectivity of the fundamental charter in
1987 i.e., that government-owned or controlled corporations were part of the Civil Service and its
employees subject to Civil Service laws and regulations, 27 regardless of the manner of the mode of their
organization or incorporation is no longer good law, being at "stark variance," to paraphrase NASECO,
with the 1987 Constitution. In other words, and contrary to the petitioner's view, as of the effectivity of
the 1987 Constitution, government-owned or controlled corporations without original charters, or, as Mr.
Justice Cruz insists in his concurring opinion in NASECO v. NLRC, 28 a legislative charter (i.e., those
organized under the Corporation Code), ceased to pertain to the Civil Service and its employees could no
longer be considered as subject to Civil Service Laws, rules or regulations.
The basic question is whether an employee in a government-owned or controlled corporations without an
original charter (and therefore not covered by Civil Service Law) nevertheless falls within the scope of
Section 66 of the Omnibus Election Code, viz.:

Sec. 66. Candidates holding appointive office or position. Any person holding a public
appointive office or position, including active members of the Armed Forces of the
Philippines, and officers and employees in government-owned or controlled corporations,
shall be considered ipso facto resigned from his office upon the filing of his certificate of
candidacy.

When the Congress of the Philippines reviewed the Omnibus Election Code of 1985, in connection with
its deliberations on and subsequent enactment of related and repealing legislation i.e., Republic Acts
Numbered 7166: "An Act Providing for Synchronized National and Local Elections and for Electoral
Reforms, Authorizing Appropriations Therefor, and for Other Purposes" (effective November 26, 1991),
6646: "An Act Introducing Additional Reforms in the Electoral System and for Other Purposes" (effective
January 5, 1988) and 6636: "An Act Resetting the Local Elections, etc., (effective November 6, 1987), it
was no doubt aware that in light of Section 2 (1), Article IX of the 1987 Constitution: (a) government-
owned or controlled corporations were of two (2) categories those with original charters, and those
organized under the general law and (b) employees of these corporations were of two (2) kinds
those covered by the Civil Service Law, rules and regulations because employed in corporations having
original charters, and those not subject to Civil Service Law but to the Labor Code because employed in
said corporations organized under the general law, or the Corporation Code. Yet Congress made no effort
to distinguish between these two classes of government-owned or controlled corporations or their
employees in the Omnibus Election Code or subsequent related statutes, particularly as regards the rule
that any employee "in government-owned or controlled corporations, shall be considered ipso
facto resigned from his office upon the filing of his certificate of candidacy." 29

Be this as it may, it seems obvious to the Court that a government-owned or controlled corporation does
not lose its character as such because not possessed of an original charter but organized under the general
law. If a corporation's capital stock is owned by the Government, or it is operated and managed by
officers charged with the mission of fulfilling the public objectives for which it has been organized, it is a
government-owned or controlled corporation even if organized under the Corporation Code and not under
a special statute; and employees thereof, even if not covered by the Civil Service but by the Labor Code,
are nonetheless "employees in government-owned or controlled corporations," and come within the letter
of Section 66 of the Omnibus Election Code, declaring them "ipso facto resigned from . . . office upon the
filing of . . . (their) certificate of candidacy."

What all this imports is that Section 66 of the Omnibus Election Code applies to officers and employees
in government-owned or controlled corporations, even those organized under the general laws on
incorporation and therefore not having an original or legislative charter, and even if they do not fall under
the Civil Service Law but under the Labor Code. In other words, Section 66 constitutes just cause for
termination of employment in addition to those set forth in the Labor Code, as amended.

The conclusions here reached make unnecessary discussion and resolution of the other issues raised in
this case.

WHEREFORE, the petition is GRANTED; the decision of public respondent National Labor Relations
Commission dated April 24, 1991 and its Resolution dated June 21, 1991 are NULLIFIED AND SET
ASIDE; and the complaint of Manuel S. Pineda is DISMISSED. No costs.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-58494 July 5, 1989

PHILIPPINE NATIONAL OIL COMPANY-ENERGY DEVELOPMENT

CORPORATION, petitioner,
vs.
HON. VICENTE T. LEOGARDO, DEPUTY MINISTER OF LABOR AND VICENTE D.
ELLELINA, respondents.

MELENCIO-HERRERA, J.:

Through this Petition for Certiorari, Philippine National Oil Company-Energy Development Corporation
(PNOC-EDC) seeks to declare null and void, for lack of jurisdiction, the Order of public respondent, the
Deputy Minister of Labor, sustaining his jurisdiction over the instant controversy.

Petitioner PNOC-EDC is a subsidiary of the Philippine National Oil Company (PNOC). On 20 January
1978, it filed with the Ministry of Labor and Employment, Regional Office No. VII, Cebu City (MOLE),
a clearance application to dismiss/ terminate the services of private respondent, Vicente D. Ellelina, a
contractual employee.

The application for clearance was premised on Ellelina's alleged commission of a crime (Alarm or Public
Scandal) during a Christmas party on 19 December 1977 at petitioner's camp in Uling, Cebu, when,
because of the refusal of the raffle committee to give him the prize corresponding to his lost winning
ticket, he tried to grab the armalite rifle of the PC Officer outside the building despite the warning shots
fired by the latter.

Clearance to dismiss was initially granted by MOLE but was subsequently revoked and petitioner was
ordered to reinstate Ellelina to his former position, without loss of seniority rights, and with backwages
from I February 1978 up to his actual reinstatement.

Petitioner appealed to the Minister of Labor who, acting through public respondent, affirmed, on 14
August 1981, the appealed Order. Hence, this Petition predicated substantially on the following grounds:

1. Under Article 277 of the Labor Code, the Ministry of Labor and Employment has no jurisdiction over
petitioner because it is a government-owned or controlled corporation;

2. Ellelina's dismissal is valid and just because it is based upon the commission of a crime.

On the other hand, public respondent contends:

(a) While the petitioner is a subsidiary of the PNOC, it is still covered by the Labor Code and, therefore,
within the jurisdiction of the Ministry of Labor inasmuch as petitioner was organized as a private
corporation under the Corporation Law and registered with the Securities and Exchange Commission;

(b) Petitioner is estopped from assailing the Labor Department's jurisdiction, having subjected itself to the
latter when it filed the application for clearance to terminate Ellelina's services; and

(c) Dismissal is too harsh a penalty.

The issues that confront us, therefore, are (1) whether or not public respondent committed grave abuse of
discretion in holding that petitioner is governed by the Labor Code; and (2) whether or not Ellelina's
dismissal was justified.

Under the laws then in force, employees of government-owned and/or controlled corporations were
governed by the Civil Service Law and not by the Labor Code. Thus, Article 277 of the Labor Code (PD
442) then provided:

The terms and conditions of employment of all government employees, including employees of
government- owned and controlled corporations shall be governed by the Civil Service Law, rules and
regulations ... .

In turn, the 1973 Constitution provided:

The Civil Service embraces every branch, agency, subdivision and instrumentality of the government,
including government-owned or controlled corporations.

In National Housing Corporation vs. Juco (L-64313, January 17, 1985, 134 SCRA 172), we laid down
the doctrine that employees of government-owned and/or controlled corporations, whether created by
special law or formed as subsidiaries under the general Corporation Law, are governed by the Civil
Service Law and not by the Labor Code.

However, the above doctrine has been supplanted by the present Constitution, which provides:

The Civil Service embraces all branches, subdivisions, instrumentalities and agencies of the Government,
including government-owned or controlled corporations with original charters. (Article IX-B, Section 2
[1])

Thus, under the present state of the law, the test in determining whether a government-owned or
controlled corporation is subject to the Civil Service Law is the manner of its creation such that
government corporations created by special charter are subject to its provisions while those incorporated
under the general Corporation Law are not within its coverage.

In NASECO vs. NLRC (G.R. No. 69870, November 29,1988), we had occasion to apply the present
Constitution in deciding whether or not the employees of NASECO (a subsidiary of the NIDC, which is
in turn a subsidiary wholly-owned by the PNB, a government-owned corporation) are covered by the
Civil Service Law or the Labor Code notwithstanding that the case arose at the time when the 1973
Constitution was still in effect. We held that the NLRC has jurisdiction over the employees of NASECO
"on the premise that it is the 1987 Constitution that governs because it is the Constitution in place at the
time of decision;" and that being a corporation without an original charter, the employees of NASECO are
subject to the provisions of the Labor Code.

We see no reason to depart from the ruling in the aforesaid case.

We hold, therefore, that the PNOC-EDC having been incorporated under the general Corporation Law, is
a government-owned or controlled corporation whose employees are subject to the provisions of the
Labor Code. This is apparently the intendment in the NASECO case notwithstanding the fact that the
NASECO therein was a subsidiary of the PNB, a government-owned corporation.

In so far as Ellelina is concerned, we hold that the reinstatement ordered by public respondent, without
loss of seniority rights, is proper. However, consistent with the rulings of the Court, backwages should be
limited to three years from 1 February 1978. The dismissal ordered by petitioner was a bit too harsh
considering the nature of the act which he had committed and that it was his first offense.

WHEREFORE, the Petition is DISMISSED, and the judgment of respondent public official is hereby
AFFIRMED. No costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 87676 December 20, 1989

REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL PARKS DEVELOPMENT

COMMITTEE, petitioner,
vs.
THE HON. COURT OF APPEALS and THE NATIONAL PARKS DEVELOPMENT
SUPERVISORY ASSOCIATION & THEIR MEMBERS, respondents.

Bienvenido D. Comia for respondents.

GRIO-AQUINO, J.:

The Regional Trial Court of Manila, Branch III, dismissed for lack of jurisdiction, the petitioner's
complaint in Civil Case No. 88- 44048 praying for a declaration of illegality of the strike of the private
respondents and to restrain the same. The Court of Appeals denied the petitioner's petition for certiorari,
hence, this petition for review.

The key issue in this case is whether the petitioner, National Parks Development Committee (NPDC), is a
government agency, or a private corporation, for on this issue depends the right of its employees to strike.

This issue came about because although the NPDC was originally created in 1963 under Executive Order
No. 30, as the Executive Committee for the development of the Quezon Memorial, Luneta and other
national parks, and later renamed as the National Parks Development Committee under Executive Order
No. 68, on September 21, 1967, it was registered in the Securities and Exchange Commission (SEC) as a
non-stock and non-profit corporation, known as "The National Parks Development Committee, Inc."

However, in August, 1987, the NPDC was ordered by the SEC to show cause why its Certificate of
Registration should not be suspended for: (a) failure to submit the General Information Sheet from 1981
to 1987; (b) failure to submit its Financial Statements from 1981 to 1986; (c) failure to register its
Corporate Books; and (d) failure to operate for a continuous period of at least five (5) years since
September 27, 1967.

On August 18, 1987, the NPDC Chairman, Amado Lansang, Jr., informed SEC that his Office had no
objection to the suspension, cancellation, or revocation of the Certificate of Registration of NPDC.

By virtue of Executive Order No. 120 dated January 30, 1989, the NPDC was attached to the Ministry
(later Department) of Tourism and provided with a separate budget subject to audit by the Commission on
Audit.

On September 10, 1987, the Civil Service Commission notified NPDC that pursuant to Executive Order
No. 120, all appointments and other personnel actions shall be submitted through the Commission.
Meanwhile, the Rizal Park Supervisory Employees Association, consisting of employees holding
supervisory positions in the different areas of the parks, was organized and it affiliated with the Trade
Union of the Philippines and Allied Services (TUPAS) under Certificate No. 1206.

On June 15, 1987, two collective bargaining agreements were entered into between NPDC and NPDCEA
(TUPAS local Chapter No. 967) and NPDC and NPDCSA (TUPAS Chapter No. 1206), for a period of
two years or until June 30, 1989.

On March 20, 1988, these unions staged a stake at the Rizal Park, Fort Santiago, Paco Park, and Pook ni
Mariang Makiling at Los Banos, Laguna, alleging unfair labor practices by NPDC.

On March 21, 1988, NPDC filed in the Regional Trial Court in Manila, Branch III, a complaint against
the union to declare the strike illegal and to restrain it on the ground that the strikers, being government
employees, have no right to strike although they may form a union.

On March 24, 1988, the lower court dismissed the complaint and lifted the restraining order for lack of
jurisdiction. It held that the case "properly falls under the jurisdiction of the Department of Labor,"
because "there exists an employer-employee relationship" between NPDC and the strikers, and "that the
acts complained of in the complaint, and which plaintiff seeks to enjoin in this action, fall under
paragraph 5 of Article 217 of the Labor Code, ..., in relation to Art. 265 of the same Code, hence,
jurisdiction over said acts does not belong to this Court but to the Labor Arbiters of the Department of
Labor." (p. 142, Rollo.).

Petitioner went to the Court of Appeals on certiorari (CA-G.R. SP No. 14204). On March 31, 1989, the
Court of appeals affirmed the order of the trial court, hence, this petition for review. The petitioner alleges
that the Court of Appeals erred:

1) in not holding that the NPDC employees are covered by the Civil Service Law; and

2) in ruling that petitioner's labor dispute with its employees is cognizable by the
Department of Labor.

We have considered the petition filed by the Solicitor General on behalf of NPDC and the comments
thereto and are persuaded that it is meritorious.

In Jesus P. Perlas, Jr. vs. People of the Philippines, G.R. Nos. 84637-39, August 2, 1989, we ruled that the
NPDC is an agency of the government, not a government-owned or controlled corporation, hence, the
Sandiganbayan had jurisdiction over its acting director who committed estafa. We held thus:

The National Parks Development Committee was created originally as an Executive

Committee on January 14,1963, for the development of the Quezon Memorial, Luneta
and other national parks (Executive Order No. 30). It was later designated as the National
Parks Development Committee (NPDC) on February 7, 1974 (E.O. No. 69). On January
9, 1966, Mrs. Imelda R. Marcos and Teodoro F. Valencia were designated Chairman and
Vice- Chairman respectively (E.O. No. 3). Despite an attempt to transfer it to the Bureau
of Forest Development, Department of Natural Resources, on December 1, 1975 (Letter
of Implementation No. 39, issued pursuant to PD No. 830, dated November 27, 1975),
the NPDC has remained under the Office of the President (E.O. No. 709, dated July 27,
1981).
 Since 1977 to 1981, the annual appropriations decrees listed NPDC as a regular
government agency under the Office of the President and allotments for its maintenance
and operating expenses were issued direct to NPDC (Exh. 10-A Perlas, Item No. 2, 3).
(Italics ours.)

Since NPDC is a government agency, its employees are covered by civil service rules and regulations
(Sec. 2, Article IX, 1987 Constitution). Its employees are civil service employees (Sec. 14, Executive
Order No. 180).

While NPDC employees are allowed under the 1987 Constitution to organize and join unions of their
choice, there is as yet no law permitting them to strike. In case of a labor dispute between the employees
and the government, Section 15 of Executive Order No. 180 dated June 1, 1987 provides that the Public
Sector Labor- Management Council, not the Department of Labor and Employment, shall hear the
dispute. Clearly, the Court of Appeals and the lower court erred in holding that the labor dispute between
the NPDC and the members of the NPDSA is cognizable by the Department of Labor and Employment.

WHEREFORE, the petition for review is granted. The decision of the Court of Appeals in CA-G.R. SP
No. 14204 is hereby set aside. The private respondents' complaint should be filed in the Public Sector
Labor-Management Council as provided in Section 15 of Executive Order No. 180. Costs against the
private respondents.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 85750 September 28, 1990

INTERNATIONAL CATHOLIC IMMIGRATION COMMISSION, petitioner

vs
HON. PURA CALLEJA IN HER CAPACITY AS DIRECTOR OF THE BUREAU OF LABOR
RELATIONS AND TRADE UNIONS OF THE PHILIPPINES AND ALLIED SERVICES
(TUPAS) WFTU respondents.

G.R. No. 89331 September 28, 1990

KAPISANAN NG MANGGAGAWA AT TAC SA IRRI-ORGANIZED LABOR ASSOCIATION

IN LINE INDUSTRIES AND AGRICULTURE, petitioner,
vs
SECRETARY OF LABOR AND EMPLOYMENT AND INTERNATIONAL RICE RESEARCH
INSTITUTE, INC., respondents.

Araullo, Zambrano, Gruba, Chua Law Firm for petitioner in 85750.

Dominguez, Armamento, Cabana & Associates for petitioner in G.R. No. 89331.

Jimenez & Associates for IRRI.

Alfredo L. Bentulan for private respondent in 85750.

MELENCIO-HERRERA, J.:

Consolidated on 11 December 1989, these two cases involve the validity of the claim of immunity by the
International Catholic Migration Commission (ICMC) and the International Rice Research Institute, Inc.
(IRRI) from the application of Philippine labor laws.

Facts and Issues

A. G.R. No. 85750 the International Catholic Migration Commission (ICMC) Case.

As an aftermath of the Vietnam War, the plight of Vietnamese refugees fleeing from South Vietnam's
communist rule confronted the international community.
In response to this crisis, on 23 February 1981, an Agreement was forged between the Philippine
Government and the United Nations High Commissioner for Refugees whereby an operating center for
processing Indo-Chinese refugees for eventual resettlement to other countries was to be established in
Bataan (Annex "A", Rollo, pp. 22-32).

ICMC was one of those accredited by the Philippine Government to operate the refugee processing center
in Morong, Bataan. It was incorporated in New York, USA, at the request of the Holy See, as a non-profit
agency involved in international humanitarian and voluntary work. It is duly registered with the United
Nations Economic and Social Council (ECOSOC) and enjoys Consultative Status, Category II. As an
international organization rendering voluntary and humanitarian services in the Philippines, its activities
are parallel to those of the International Committee for Migration (ICM) and the International Committee
of the Red Cross (ICRC) [DOLE Records of BLR Case No. A-2-62-87, ICMC v. Calleja, Vol. 1].

On 14 July 1986, Trade Unions of the Philippines and Allied Services (TUPAS) filed with the then
Ministry of Labor and Employment a Petition for Certification Election among the rank and file members
employed by ICMC The latter opposed the petition on the ground that it is an international organization
registered with the United Nations and, hence, enjoys diplomatic immunity.

On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained ICMC and dismissed the petition for
lack of jurisdiction.

On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor Relations (BLR), reversed the Med-
Arbiter's Decision and ordered the immediate conduct of a certification election. At that time, ICMC's
request for recognition as a specialized agency was still pending with the Department of Foreign Affairs
(DEFORAF).

Subsequently, however, on 15 July 1988, the Philippine Government, through the DEFORAF, granted
ICMC the status of a specialized agency with corresponding diplomatic privileges and immunities, as
evidenced by a Memorandum of Agreement between the Government and ICMC (Annex "E",
Petition, Rollo, pp. 41-43), infra.

ICMC then sought the immediate dismissal of the TUPAS Petition for Certification Election invoking the
immunity expressly granted but the same was denied by respondent BLR Director who, again, ordered the
immediate conduct of a pre-election conference. ICMC's two Motions for Reconsideration were denied
despite an opinion rendered by DEFORAF on 17 October 1988 that said BLR Order violated ICMC's
diplomatic immunity.

Thus, on 24 November 1988, ICMC filed the present Petition for Certiorari with Preliminary Injunction
assailing the BLR Order.

On 28 November 1988, the Court issued a Temporary Restraining Order enjoining the holding of the
certification election.

On 10 January 1989, the DEFORAF, through its Legal Adviser, retired Justice Jorge C. Coquia of the
Court of Appeals, filed a Motion for Intervention alleging that, as the highest executive department with
the competence and authority to act on matters involving diplomatic immunity and privileges, and tasked
with the conduct of Philippine diplomatic and consular relations with foreign governments and UN
organizations, it has a legal interest in the outcome of this case.

Over the opposition of the Solicitor General, the Court allowed DEFORAF intervention.
On 12 July 1989, the Second Division gave due course to the ICMC Petition and required the submittal of
memoranda by the parties, which has been complied with.

As initially stated, the issue is whether or not the grant of diplomatic privileges and immunites to ICMC
extends to immunity from the application of Philippine labor laws.

ICMC sustains the affirmative of the proposition citing (1) its Memorandum of Agreement with the
Philippine Government giving it the status of a specialized agency, (infra); (2) the Convention on the
Privileges and Immunities of Specialized Agencies, adopted by the UN General Assembly on 21
November 1947 and concurred in by the Philippine Senate through Resolution No. 91 on 17 May 1949
(the Philippine Instrument of Ratification was signed by the President on 30 August 1949 and deposited
with the UN on 20 March 1950) infra; and (3) Article II, Section 2 of the 1987 Constitution, which
declares that the Philippines adopts the generally accepted principles of international law as part of the
law of the land.

Intervenor DEFORAF upholds ICMC'S claim of diplomatic immunity and seeks an affirmance of the
DEFORAF determination that the BLR Order for a certification election among the ICMC employees is
violative of the diplomatic immunity of said organization.

Respondent BLR Director, on the other hand, with whom the Solicitor General agrees, cites State policy
and Philippine labor laws to justify its assailed Order, particularly, Article II, Section 18 and Article III,
Section 8 of the 1987 Constitution, infra; and Articles 243 and 246 of the Labor Code, as amended, ibid.
In addition, she contends that a certification election is not a litigation but a mere investigation of a non-
adversary, fact-finding character. It is not a suit against ICMC its property, funds or assets, but is the sole
concern of the workers themselves.

B. G.R. No. 89331 (The International Rice Research Institute [IRRI] Case).

Before a Decision could be rendered in the ICMC Case, the Third Division, on 11 December 1989,
resolved to consolidate G.R. No. 89331 pending before it with G.R. No. 85750, the lower-numbered case
pending with the Second Division, upon manifestation by the Solicitor General that both cases involve
similar issues.

The facts disclose that on 9 December 1959, the Philippine Government and the Ford and Rockefeller
Foundations signed a Memorandum of Understanding establishing the International Rice Research
Institute (IRRI) at Los Baos, Laguna. It was intended to be an autonomous, philanthropic, tax-free, non-
profit, non-stock organization designed to carry out the principal objective of conducting "basic research
on the rice plant, on all phases of rice production, management, distribution and utilization with a view to
attaining nutritive and economic advantage or benefit for the people of Asia and other major rice-growing
areas through improvement in quality and quantity of rice."

Initially, IRRI was organized and registered with the Securities and Exchange Commission as a private
corporation subject to all laws and regulations. However, by virtue of Pres. Decree No. 1620,
promulgated on 19 April 1979, IRRI was granted the status, prerogatives, privileges and immunities of an
international organization.

The Organized Labor Association in Line Industries and Agriculture (OLALIA), is a legitimate labor
organization with an existing local union, the Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan, for
short) in respondent IRRI.
On 20 April 1987, the Kapisanan filed a Petition for Direct Certification Election with Region IV,
Regional Office of the Department of Labor and Employment (DOLE).

IRRI opposed the petition invoking Pres. Decree No. 1620 conferring upon it the status of an international
organization and granting it immunity from all civil, criminal and administrative proceedings under
Philippine laws.

On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the opposition on the basis of Pres. Decree No.
1620 and dismissed the Petition for Direct Certification.

On appeal, the BLR Director, who is the public respondent in the ICMC Case, set aside the Med-Arbiter's
Order and authorized the calling of a certification election among the rank-and-file employees of IRRI.
Said Director relied on Article 243 of the Labor Code, as amended, infra and Article XIII, Section 3 of
the 1987 Constitution, 1and held that "the immunities and privileges granted to IRRI do not include
exemption from coverage of our Labor Laws." Reconsideration sought by IRRI was denied.

On appeal, the Secretary of Labor, in a Resolution of 5 July 1989, set aside the BLR Director's Order,
dismissed the Petition for Certification Election, and held that the grant of specialized agency status by
the Philippine Government to the IRRI bars DOLE from assuming and exercising jurisdiction over IRRI
Said Resolution reads in part as follows:

Presidential Decree No. 1620 which grants to the IRRI the status, prerogatives, privileges
and immunities of an international organization is clear and explicit. It provides in
categorical terms that:

Art. 3 The Institute shall enjoy immunity from any penal, civil and administrative
proceedings, except insofar as immunity has been expressly waived by the Director-
General of the Institution or his authorized representative.

Verily, unless and until the Institute expressly waives its immunity, no summons,
subpoena, orders, decisions or proceedings ordered by any court or administrative
or quasi-judicial agency are enforceable as against the Institute. In the case at bar there
was no such waiver made by the Director-General of the Institute. Indeed, the Institute, at
the very first opportunity already vehemently questioned the jurisdiction of this
Department by filing an ex-parte motion to dismiss the case.

Hence, the present Petition for Certiorari filed by Kapisanan alleging grave abuse of discretion by
respondent Secretary of Labor in upholding IRRI's diplomatic immunity.

The Third Division, to which the case was originally assigned, required the respondents to comment on
the petition. In a Manifestation filed on 4 August 1990, the Secretary of Labor declared that it was "not
adopting as his own" the decision of the BLR Director in the ICMC Case as well as the Comment of the
Solicitor General sustaining said Director. The last pleading was filed by IRRI on 14 August 1990.

Instead of a Comment, the Solicitor General filed a Manifestation and Motion praying that he be excused
from filing a comment "it appearing that in the earlier case of International Catholic Migration
Commission v. Hon. Pura Calleja, G.R. No. 85750. the Office of the Solicitor General had sustained the
stand of Director Calleja on the very same issue now before it, which position has been superseded by
respondent Secretary of Labor in G.R. No. 89331," the present case. The Court acceded to the Solicitor
General's prayer.
The Court is now asked to rule upon whether or not the Secretary of Labor committed grave abuse of
discretion in dismissing the Petition for Certification Election filed by Kapisanan.

Kapisanan contends that Article 3 of Pres. Decree No. 1620 granting IRRI the status, privileges,
prerogatives and immunities of an international organization, invoked by the Secretary of Labor, is
unconstitutional in so far as it deprives the Filipino workers of their fundamental and constitutional right
to form trade unions for the purpose of collective bargaining as enshrined in the 1987 Constitution.

A procedural issue is also raised. Kapisanan faults respondent Secretary of Labor for entertaining IRRI'S
appeal from the Order of the Director of the Bureau of Labor Relations directing the holding of a
certification election. Kapisanan contends that pursuant to Sections 7, 8, 9 and 10 of Rule V 2 of the
Omnibus Rules Implementing the Labor Code, the Order of the BLR Director had become final and
unappeable and that, therefore, the Secretary of Labor had no more jurisdiction over the said appeal.

On the other hand, in entertaining the appeal, the Secretary of Labor relied on Section 25 of Rep. Act. No.
6715, which took effect on 21 March 1989, providing for the direct filing of appeal from the Med-Arbiter
to the Office of the Secretary of Labor and Employment instead of to the Director of the Bureau of Labor
Relations in cases involving certification election orders.

III

Findings in Both Cases.

There can be no question that diplomatic immunity has, in fact, been granted ICMC and IRRI.

Article II of the Memorandum of Agreement between the Philippine Government and ICMC provides that
ICMC shall have a status "similar to that of a specialized agency." Article III, Sections 4 and 5 of the
Convention on the Privileges and Immunities of Specialized Agencies, adopted by the UN General
Assembly on 21 November 1947 and concurred in by the Philippine Senate through Resolution No. 19 on
17 May 1949, explicitly provides:

Art. III, Section 4. The specialized agencies, their property and assets, wherever located
and by whomsoever held, shall enjoy immunity from every form of legal process except
insofar as in any particular case they have expressly waived their immunity. It is,
however, understood that no waiver of immunity shall extend to any measure of
execution.

Sec. 5. The premises of the specialized agencies shall be inviolable. The property and
assets of the specialized agencies, wherever located and by whomsoever held shall be
immune from search, requisition, confiscation, expropriation and any other form of
interference, whether by executive, administrative, judicial or legislative action.
(Emphasis supplied).

IRRI is similarly situated, Pres. Decree No. 1620, Article 3, is explicit in its grant of immunity, thus:

Art. 3. Immunity from Legal Process. The Institute shall enjoy immunity from any
penal, civil and administrative proceedings, except insofar as that immunity has been
expressly waived by the Director-General of the Institute or his authorized
representatives.
Thus it is that the DEFORAF, through its Legal Adviser, sustained ICMC'S invocation of immunity when
in a Memorandum, dated 17 October 1988, it expressed the view that "the Order of the Director of the
Bureau of Labor Relations dated 21 September 1988 for the conduct of Certification Election within
ICMC violates the diplomatic immunity of the organization." Similarly, in respect of IRRI, the
DEFORAF speaking through The Acting Secretary of Foreign Affairs, Jose D. Ingles, in a letter, dated 17
June 1987, to the Secretary of Labor, maintained that "IRRI enjoys immunity from the jurisdiction of
DOLE in this particular instance."

The foregoing opinions constitute a categorical recognition by the Executive Branch of the Government
that ICMC and IRRI enjoy immunities accorded to international organizations, which determination has
been held to be a political question conclusive upon the Courts in order not to embarrass a political
department of Government.

It is a recognized principle of international law and under our system of separation of

powers that diplomatic immunity is essentially a political question and courts should
refuse to look beyond a determination by the executive branch of the government, and
where the plea of diplomatic immunity is recognized and affirmed by the executive
branch of the government as in the case at bar, it is then the duty of the courts to accept
the claim of immunity upon appropriate suggestion by the principal law officer of the
government . . . or other officer acting under his direction. Hence, in adherence to the
settled principle that courts may not so exercise their jurisdiction . . . as to embarrass the
executive arm of the government in conducting foreign relations, it is accepted doctrine
that in such cases the judicial department of (this) government follows the action of the
political branch and will not embarrass the latter by assuming an antagonistic
jurisdiction. 3

A brief look into the nature of international organizations and specialized agencies is in order. The term
"international organization" is generally used to describe an organization set up by agreement between
two or more states. 4 Under contemporary international law, such organizations are endowed with some
degree of international legal personality 5 such that they are capable of exercising specific rights, duties
and powers. 6 They are organized mainly as a means for conducting general international business in
which the member states have an interest. 7 The United Nations, for instance, is an international
organization dedicated to the propagation of world peace.

"Specialized agencies" are international organizations having functions in particular fields. The term
appears in Articles 57 8 and 63 9 of the Charter of the United Nations:

The Charter, while it invests the United Nations with the general task of promoting
progress and international cooperation in economic, social, health, cultural, educational
and related matters, contemplates that these tasks will be mainly fulfilled not by organs of
the United Nations itself but by autonomous international organizations established by
inter-governmental agreements outside the United Nations. There are now many such
international agencies having functions in many different fields, e.g. in posts,
telecommunications, railways, canals, rivers, sea transport, civil aviation, meteorology,
atomic energy, finance, trade, education and culture, health and refugees. Some are
virtually world-wide in their membership, some are regional or otherwise limited in their
membership. The Charter provides that those agencies which have "wide international
responsibilities" are to be brought into relationship with the United Nations by
agreements entered into between them and the Economic and Social Council, are then to
be known as "specialized agencies." 10
The rapid growth of international organizations under contemporary international law has paved the way
for the development of the concept of international immunities.

It is now usual for the constitutions of international organizations to contain provisions

conferring certain immunities on the organizations themselves, representatives of their
member states and persons acting on behalf of the organizations. A series of conventions,
agreements and protocols defining the immunities of various international organizations
in relation to their members generally are now widely in force; . . . 11

There are basically three propositions underlying the grant of international immunities to international
organizations. These principles, contained in the ILO Memorandum are stated thus: 1) international
institutions should have a status which protects them against control or interference by any one
government in the performance of functions for the effective discharge of which they are responsible to
democratically constituted international bodies in which all the nations concerned are represented; 2) no
country should derive any national financial advantage by levying fiscal charges on common international
funds; and 3) the international organization should, as a collectivity of States members, be accorded the
facilities for the conduct of its official business customarily extended to each other by its individual
member States. 12 The theory behind all three propositions is said to be essentially institutional in
character. "It is not concerned with the status, dignity or privileges of individuals, but with the elements
of functional independence necessary to free international institutions from national control and to enable
them to discharge their responsibilities impartially on behalf of all their members. 13 The raison d'etre for
these immunities is the assurance of unimpeded performance of their functions by the agencies
concerned.

The grant of immunity from local jurisdiction to ICMC and IRRI is clearly necessitated by their
international character and respective purposes. The objective is to avoid the danger of partiality and
interference by the host country in their internal workings. The exercise of jurisdiction by the Department
of Labor in these instances would defeat the very purpose of immunity, which is to shield the affairs of
international organizations, in accordance with international practice, from political pressure or control by
the host country to the prejudice of member States of the organization, and to ensure the unhampered
performance of their functions.

ICMC's and IRRI's immunity from local jurisdiction by no means deprives labor of its basic rights, which
are guaranteed by Article II, Section 18, 14 Article III, Section 8, 15 and Article XIII, Section 3 (supra), of
the 1987 Constitution; and implemented by Articles 243 and 246 of the Labor Code, 16 relied on by the
BLR Director and by Kapisanan.

For, ICMC employees are not without recourse whenever there are disputes to be settled. Section 31 of
the Convention on the Privileges and Immunities of the Specialized Agencies of the United
Nations 17 provides that "each specialized agency shall make provision for appropriate modes of
settlement of: (a) disputes arising out of contracts or other disputes of private character to which the
specialized agency is a party." Moreover, pursuant to Article IV of the Memorandum of Agreement
between ICMC the the Philippine Government, whenever there is any abuse of privilege by ICMC, the
Government is free to withdraw the privileges and immunities accorded. Thus:

Art. IV. Cooperation with Government Authorities. 1. The Commission shall

cooperate at all times with the appropriate authorities of the Government to ensure the
observance of Philippine laws, rules and regulations, facilitate the proper administration
of justice and prevent the occurrences of any abuse of the privileges and immunities
 granted its officials and alien employees in Article III of this Agreement to the
Commission.

2. In the event that the Government determines that there has been an abuse of the
privileges and immunities granted under this Agreement, consultations shall be held
between the Government and the Commission to determine whether any such abuse has
occurred and, if so, the Government shall withdraw the privileges and immunities granted
the Commission and its officials.

Neither are the employees of IRRI without remedy in case of dispute with management as, in fact, there
had been organized a forum for better management-employee relationship as evidenced by the formation
of the Council of IRRI Employees and Management (CIEM) wherein "both management and employees
were and still are represented for purposes of maintaining mutual and beneficial cooperation between
IRRI and its employees." The existence of this Union factually and tellingly belies the argument that Pres.
Decree No. 1620, which grants to IRRI the status, privileges and immunities of an international
organization, deprives its employees of the right to self-organization.

The immunity granted being "from every form of legal process except in so far as in any particular case
they have expressly waived their immunity," it is inaccurate to state that a certification election is beyond
the scope of that immunity for the reason that it is not a suit against ICMC. A certification election cannot
be viewed as an independent or isolated process. It could tugger off a series of events in the collective
bargaining process together with related incidents and/or concerted activities, which could inevitably
involve ICMC in the "legal process," which includes "any penal, civil and administrative proceedings."
The eventuality of Court litigation is neither remote and from which international organizations are
precisely shielded to safeguard them from the disruption of their functions. Clauses on jurisdictional
immunity are said to be standard provisions in the constitutions of international Organizations. "The
immunity covers the organization concerned, its property and its assets. It is equally applicable to
proceedings in personam and proceedings in rem." 18

We take note of a Manifestation, dated 28 September 1989, in the ICMC Case (p. 161, Rollo), wherein
TUPAS calls attention to the case entitled "International Catholic Migration Commission v. NLRC, et
als., (G.R. No. 72222, 30 January 1989, 169 SCRA 606), and claims that, having taken cognizance of that
dispute (on the issue of payment of salary for the unexpired portion of a six-month probationary
employment), the Court is now estopped from passing upon the question of DOLE jurisdiction petition
over ICMC.

We find no merit to said submission. Not only did the facts of said controversy occur between 1983-1985,
or before the grant to ICMC on 15 July 1988 of the status of a specialized agency with corresponding
immunities, but also because ICMC in that case did not invoke its immunity and, therefore, may be
deemed to have waived it, assuming that during that period (1983-1985) it was tacitly recognized as
enjoying such immunity.

Anent the procedural issue raised in the IRRI Case, suffice it to state that the Decision of the BLR
Director, dated 15 February 1989, had not become final because of a Motion for Reconsideration filed by
IRRI Said Motion was acted upon only on 30 March 1989 when Rep. Act No. 6715, which provides for
direct appeals from the Orders of the Med-Arbiter to the Secretary of Labor in certification election cases
either from the order or the results of the election itself, was already in effect, specifically since 21 March
1989. Hence, no grave abuse of discretion may be imputed to respondent Secretary of Labor in his
assumption of appellate jurisdiction, contrary to Kapisanan's allegations. The pertinent portion of that law
provides:
 Art. 259. Any party to an election may appeal the order or results of the election as
determined by the Med-Arbiter directly to the Secretary of Labor and Employment on the
ground that the rules and regulations or parts thereof established by the Secretary of
Labor and Employment for the conduct of the election have been violated. Such appeal
shall be decided within 15 calendar days (Emphasis supplied).

En passant, the Court is gratified to note that the heretofore antagonistic positions assumed by two
departments of the executive branch of government have been rectified and the resultant embarrassment
to the Philippine Government in the eyes of the international community now, hopefully, effaced.

WHEREFORE, in G.R. No. 85750 (the ICMC Case), the Petition is GRANTED, the Order of the Bureau
of Labor Relations for certification election is SET ASIDE, and the Temporary Restraining Order earlier
issued is made PERMANENT.

In G.R. No. 89331 (the IRRI Case), the Petition is Dismissed, no grave abuse of discretion having been
committed by the Secretary of Labor and Employment in dismissing the Petition for Certification
Election.

No pronouncement as to costs.

SO ORDERED.
SUPREME COURT

SECOND DIVISION

INTERNATIONAL CATHOLIC

MIGRATION COMMISSION,

Petitioner,

-versus- G.R. No. 85750

September 28, 1990

HON. PURA CALLEJA IN HER

CAPACITY AS DIRECTOR OF THE

BUREAU OF LABOR RELATIONS AND

TRADE UNIONS OF THE PHILIPPINES

AND ALLIED SERVICES (TUPAS)

WFTU,

Respondents.

x---------------------------------------------------x

KAPISANAN NG MANGGAGAWA AT

TAC SA IRRI - ORGANIZED LABOR

ASSOCIATION IN LINE INDUSTRIES

AND AGRICULTURE,

Petitioner,

-versus- G.R. No. 89331

SECRETARY OF LABOR AND

EMPLOYMENT AND INTERNATIONAL

RICE RESEARCH INSTITUTE, INC.,

Respondents.

x---------------------------------------------------x

DECISION

MELENCIO-HERRERA, J.:

Consolidated on 11 December 1989, these two cases involve the

validity of the claim of immunity by the International Catholic

Migration Commission (ICMC) and the International Rice Research

Institute, Inc. (IRRI) from the application of Philippine labor laws.

Facts and Issues

A. G.R. No. 85750 the International Catholic Migration

Commission (ICMC) Case.

As an aftermath of the Vietnam War, the plight of Vietnamese

refugees fleeing from South Vietnams communist rule confronted the

international community.

In response to this crisis, on 23 February 1981, an Agreement was

forged between the Philippine Government and the United Nations

High Commissioner for Refugees whereby an operating center for

processing Indo-Chinese refugees for eventual resettlement to other

countries was to be established in Bataan (Annex A, Rollo, pp. 22-

32).

ICMC was one of those accredited by the Philippine Government to

operate the refugee processing center in Morong, Bataan. It was

incorporated in New York, USA, at the request of the Holy See, as a

non-profit agency involved in international humanitarian and

voluntary work. It is duly registered with the United Nations

Economic and Social Council (ECOSOC) and enjoys Consultative

Status, Category II. As an international organization rendering

voluntary and humanitarian services in the Philippines, its activities

are parallel to those of the International Committee for Migration

(ICM) and the International Committee of the Red Cross (ICRC)

[DOLE Records of BLR Case No. A-2-62-87, ICMC vs. Calleja, Vol. I].

On 14 July 1986, Trade Unions of the Philippines and Allied Services

(TUPAS) filed with the then Ministry of Labor and Employment a

Petition for Certification Election among the rank and file members

employed by ICMC. The latter opposed the petition on the ground

that it is an international organization registered with the United

Nations and, hence, enjoys diplomatic immunity.

On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained ICMC

and dismissed the petition for lack of jurisdiction.

On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor

Relations (BLR), reversed the Med-Arbiters Decision and ordered the

immediate conduct of a certification election. At that time, ICMCs

request for recognition as a specialized agency was still pending with

the Department of Foreign Affairs (DEFORAF).

Subsequently, however, on 15 July 1988, the Philippine Government,

through the DEFORAF, granted ICMC the status of a specialized

agency with corresponding diplomatic privileges and immunities, as

evidenced by a Memorandum of Agreement between the Government

and ICMC (Annex E, Petition, Rollo, pp. 41-43), infra.

ICMC then sought the immediate dismissal of the TUPAS Petition for

Certification Election invoking the immunity expressly granted but

the same was denied by respondent BLR Director who, again, ordered

the immediate conduct of a pre-election conference. ICMCs two

Motions for Reconsideration were denied despite an opinion

rendered by DEFORAF on 17 October 1988 that said BLR Order

violated ICMCs diplomatic immunity.

Thus, on 24 November 1988, ICMC filed the present Petition for

Certiorari with Preliminary Injunction assailing the BLR Order.

On 28 November 1988, the Court issued a Temporary Restraining

Order enjoining the holding of the certification election.

On 10 January 1989, the DEFORAF, through its Legal Adviser, retired

Justice Jorge C. Coquia of the Court of Appeals, filed a Motion for

Intervention alleging that, as the highest executive department with

the competence and authority to act on matters involving diplomatic

immunity and privileges, and tasked with the conduct of Philippine

diplomatic and consular relations with foreign governments and UN

organizations, it has a legal interest in the outcome of this case.

Over the opposition of the Solicitor General, the Court allowed

DEFORAF intervention.

On 12 July 1989, the Second Division gave due course to the ICMC

Petition and required the submittal of memoranda by the parties,

which has been complied with.

As initially stated, the issue is whether or not the grant of diplomatic

privileges and immunities to ICMC extends to immunity from the

application of Philippine labor laws.

ICMC sustains the affirmative of the proposition citing (1) its

Memorandum of Agreement with the Philippine Government giving it

the status of a specialized agency, (infra); (2) the Convention on the

Privileges and Immunities of Specialized Agencies, adopted by the

UN General Assembly on 21 November 1947 and concurred in by the

Philippine Senate through Resolution No. 91 on 17 May 1949 (the

Philippine Instrument of Ratification was signed by the President on

30 August 1949 and deposited with the UN on 20 March 1950) infra;

and (3) Article II, Section 2 of the 1987 Constitution, which declares

that the Philippines adopts the generally accepted principles of

international law as part of the law of the land.

Intervenor DEFORAF upholds ICMCs claim of diplomatic immunity

and seeks an affirmance of the DEFORAF determination that the BLR

Order for a certification election among the ICMC employees is

violative of the diplomatic immunity of said organization.

Respondent BLR Director, on the other hand, with whom the

Solicitor General agrees, cites State policy and Philippine labor laws

to justify its assailed Order, particularly, Article II, Section 18 and

Article III, Section 8 of the 1987 Constitution, infra; and Articles 243

and 246 of the Labor Code, as amended, ibid. In addition, she

contends that a certification election is not a litigation but a mere

investigation of a non-adversary, fact-finding character. It is not a suit

against ICMC, its property, funds or assets, but is the sole concern of

the workers themselves.

B. G.R. No. 89331 (The International Rice Research Institute

[IRRI] Case).

Before a Decision could be rendered in the ICMC Case, the Third

Division, on 11 December 1989, resolved to consolidate G.R. No.

89331 pending before it with G.R. No. 85750, the lower-numbered

case pending with the Second Division, upon manifestation by the

Solicitor General that both cases involve similar issues.

The facts disclose that on 9 December 1959, the Philippine

Government and the Ford and Rockefeller Foundations signed a

Memorandum of Understanding establishing the International Rice

Research Institute (IRRI) at Los Baos, Laguna. It was intended to be

an autonomous, philanthropic, tax-free non-profit, non-stock

organization designed to carry out the principal objective of

conducting basic research on the rice plant, on all phases of rice

production, management, distribution and utilization with a view to

attaining nutritive and economic advantage or benefit for the people

of Asia and other major rice-growing areas through improvement in

quality and quantity of rice.

Initially, IRRI was organized and registered with the Securities and

Exchange Commission as a private corporation subject to all laws and

regulations. However, by virtue of Pres. Decree No. 1620,

promulgated on 19 April 1979, IRRI was granted the status,

prerogatives, privileges and immunities of an international

organization.

The Organized Labor Association in Line Industries and Agriculture

(OLALIA), is a legitimate labor organization with an existing local

union, the Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan, for

short) in respondent IRRI.

On 20 April 1987, the Kapisanan filed a Petition for Direct

Certification Election with Region IV, Regional Office of the

Department of Labor and Employment (DOLE).

IRRI opposed the petition invoking Pres. Decree No. 1620 conferring

upon it the status of an international organization and granting it

immunity from all civil, criminal and administrative proceedings

under Philippine laws.

On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the

opposition on the basis of Pres. Decree No. 1620 and dismissed the

Petition for Direct Certification.

On appeal, the BLR Director, who is the public respondent in the

ICMC Case, set aside the Med-Arbiters Order and authorized the

calling of a certification election among the rank-and-file employees

of IRRI. Said Director relied on Article 243 of the Labor Code, as

amended, infra, and Article XIII, Section 3 of the 1987 Constitution,[1]

and held that the immunities and privileges granted to IRRI do not
include exemption from coverage of our Labor Laws.

Reconsideration sought by IRRI was denied.

On appeal, the Secretary of Labor, in a Resolution of 5 July 1989, set

aside the BLR Directors Order, dismissed the Petition for

Certification Election, and held that the grant of specialized agency

status by the Philippine Government to the IRRI bars DOLE from

assuming and exercising jurisdiction over IRRI. Said Resolution

reads in part as follows:

Presidential Decree No. 1620 which grants to the IRRI the

status, prerogatives, privileges and immunities of an

international organization is clear and explicit. It provides in

categorical terms that:

Art. 3 The Institute shall enjoy immunity from any penal,

civil and administrative proceedings, except insofar as

immunity has been expressly waived by the Director-General of

the Institution or his authorized representative.

Verily, unless and until the Institute expressly waives its

immunity, no summons, subpoena, orders, decisions or

proceedings ordered by any court or administrative or quasijudicial

agency are enforceable as against the Institute. In the

case at bar there was no such waiver made by the DirectorGeneral

of the Institute. Indeed, the Institute, at the very first

opportunity already vehemently questioned the jurisdiction of

this Department by filing an ex-parte motion to dismiss the

case.

Hence, the present Petition for Certiorari filed by Kapisanan alleging

grave abuse of discretion by respondent Secretary of Labor in

upholding IRRIs diplomatic immunity.

The Third Division, to which the case was originally assigned required

the respondents to comment on the petition. In a Manifestation filed

on 4 August 1990, the Secretary of Labor declared that it was not

adopting as his own the decision of the BLR Director in the ICMC

Case as well as the Comment of the Solicitor General sustaining said

Director. The last pleading was filed by IRRI on 14 August 1990.

Instead of a Comment, the Solicitor General filed a Manifestation and

Motion praying that he be excused from filing a comment it

appearing that in the earlier case of International Catholic Migration

Commission vs. Hon. Pura Calleja, G.R. No. 85750, the Office of the

Solicitor General had sustained the stand of Director Calleja on the

very same issue now before it, which position has been superseded by

respondent Secretary of Labor in G.R. No. 89331, the present case.

The Court acceded to the Solicitor Generals prayer.

The Court is now asked to rule upon whether or not the Secretary of

Labor committed grave abuse of discretion in dismissing the Petition

for Certification Election filed by Kapisanan.

Kapisanan contends that Article 3 of Pres. Decree No. 1620 granting

IRRI the status, privileges, prerogatives and immunities of an

international organization, invoked by the Secretary of Labor, is

unconstitutional in so far as it deprives the Filipino workers of their

fundamental and constitutional right to form trade unions for the

purpose of collective bargaining as enshrined in the 1987

Constitution.

A procedural issue is also raised. Kapisanan faults respondent

Secretary of Labor for entertaining IRRIs appeal from the Order of

the Director of the Bureau of Labor Relations directing the holding of

a certification election. Kapisanan contends that pursuant to Sections

7, 8, 9 and 10 of Rule V[2] of the Omnibus Rules Implementing the

Labor Code, the Order of the BLR Director had become final and

unappealable and that, therefore, the Secretary of Labor had no more

jurisdiction over the said appeal.

On the other hand, in entertaining the appeal, the Secretary of Labor

relied on Section 25 of Rep. Act. No. 6715, which took effect on 21

March 1989, providing for the direct filing of appeal from the MedArbiter

to the Office of the Secretary of Labor and Employment

instead of to the Director of the Bureau of Labor Relations in cases

involving certification election orders.

III

Findings in Both Cases.

There can be no question that diplomatic immunity has, in fact, been

granted ICMC and IRRI.

Article II of the Memorandum of Agreement between the Philippine

Government and ICMC provides that ICMC shall have a status

similar to that of a specialized agency. Article III, Sections 4 and 5

of the Convention on the Privileges and Immunities of Specialized

Agencies, adopted by the UN General Assembly on 21 November 1947

and concurred in by the Philippine Senate through Resolution No. 19

on 17 May 1949, explicitly provides:

Article III, Section 4. The specialized agencies, their property

and assets, wherever located and by whomsoever held, shall

enjoy immunity from every form of legal process except insofar

as in any particular case they have expressly waived their

immunity. It is however, understood that no waiver of

immunity shall extend to any measure of execution.

Sec. 5. The premises of the specialized agencies shall be

inviolable. The property and assets of the specialized agencies,

wherever located and by whomsoever held shall be immune

from search, requisition, confiscation, expropriation and any

other form of interference, whether by executive,

administrative, judicial or legislative action. (Emphasis ours).

IRRI is similarly situated. Pres. Decree No. 1620, Article 3, is explicit

in its grant of immunity, thus:

Article 3. Immunity from Legal Process. The Institute shall

enjoy immunity from any penal, civil and administrative

proceedings, except insofar as that immunity has been expressly

waived by the Director-General of the Institute or his

authorized representatives.
Thus it is that the DEFORAF, through its Legal Adviser, sustained

ICMCs invocation of immunity when in a Memorandum, dated 17

October 1988, it expressed the view that the Order of the Director of

the Bureau of Labor Relations dated 21 September 1988 for the

conduct of Certification Election within ICMC violates the diplomatic

immunity of the organization. Similarly, in respect of IRRI, the

DEFORAF speaking through The Acting Secretary of Foreign Affairs,

Jose D. Ingles, in a letter, dated 17 June 1987, to the Secretary of

Labor, maintained that IRRI enjoys immunity from the jurisdiction

of DOLE in this particular instance.

The foregoing opinions constitute a categorical recognition by the

Executive Branch of the Government that ICMC and IRRI enjoy

immunities accorded to international organizations, which

determination has been held to be a political question conclusive

upon the Courts in order not to embarrass a political department of

Government.

It is a recognized principle of international law and under our system

of separation of powers that diplomatic immunity is essentially a

political question and courts should refuse to look beyond a

determination by the executive branch of the government, and where

the plea of diplomatic immunity is recognized and affirmed by the

executive branch of the government as in the case at bar, it is then the

duty of courts to accept the claim of immunity upon appropriate

suggestion by the principal law officer of the government or other

officer acting under his direction. Hence, in adherence to the settled

principle that courts may not so exercise their jurisdiction as to

embarrass the executive arm of the government in conducting foreign

relations, it is accepted doctrine that in such cases the judicial

department of (this) government follows the action of the political

branch and will not embarrass the latter by assuming an antagonistic

jurisdiction.[3]

A brief look into the nature of international organizations and

specialized agencies is in order. The term international organization

is generally used to describe an organization set up by agreement

between two or more states.[4] Under contemporary international law,

such organizations are endowed with some degree of international

legal personality[5] such that they are capable of exercising specific

rights, duties and powers.[6] They are organized mainly as a means for

conducting general international business in which the member

states have an interest.[7] The United Nations, for instance, is an

international organization dedicated to the propagation of world

peace.

Specialized agencies are international organizations having

functions in particular fields. The term appears in Articles 57[8] and

63[9] of the Charter of the United Nations:

The Charter, while it invests the United Nations with the

general task of promoting progress and international

cooperation in economic, social, health, cultural, educational

and related matters, contemplates that these tasks will be

mainly fulfilled not by organs of the United Nations itself but by

autonomous international organizations established by intergovernmental

agreements outside the United Nations. There

are now many such international agencies having functions in

many different fields, e.g. in posts, telecommunications,

railways, canals, rivers, sea transport, civil aviation,

meteorology, atomic energy, finance, trade, education and

culture, health and refugees. Some are virtually world-wide in

their membership, some are regional or otherwise limited in

their membership. The Charter provides that those agencies

which have wide international responsibilities are to be

brought into relationship with the United Nations by

agreements entered into between them and the Economic and

Social Council, are then to be known as specialized

agencies.[10]

The rapid growth of international organizations under contemporary

international law has paved the way for the development of the

concept of international immunities.

It is now usual for the constitutions of international

organizations to contain provisions conferring certain

immunities on the organizations themselves, representatives of

their member states and persons acting on behalf of the

organizations. A series of conventions, agreements and

protocols defining the immunities of various international

organizations in relation to their members generally are now

widely in force;[11]

There are basically three propositions underlying the grant of

international immunities to international organizations. These

principles, contained in the ILO Memorandum are stated thus: 1)

international institutions should have a status which protects them

against control or interference by any one government in the

performance of functions for the effective discharge of which they are

responsible to democratically constituted international bodies in

which all the nations concerned are represented; 2) no country should

derive any national financial advantage by levying fiscal charges on

common international funds; and 3) the international organization

should, as a collectivity of States members, be accorded the facilities

for the conduct of its official business customarily extended to each

other by its individual member States.[12] The theory behind all three

propositions is said to be essentially institutional in character. It is

not concerned with the status, dignity or privileges of individuals, but

with the elements of functional independence necessary to free

international institutions from national control and to enable them to

discharge their responsibilities impartially on behalf of all their

members.[13] The raison detre for these immunities is the assurance

of unimpeded performance of their functions by the agencies

concerned.
The grant of immunity from local jurisdiction to ICMC and IRRI is

clearly necessitated by their international character and respective

purposes. The objective is to avoid the danger of partiality and

interference by the host country in their internal workings. The

exercise of jurisdiction by the Department of Labor in these instances

would defeat the very purpose of immunity, which is to shield the

affairs of international organizations, in accordance with

international practice, from political pressure or control by the host

country to the prejudice a member States of the organization, and to

ensure the unhampered performance of their functions.

ICMCs and IRRIs immunity from local jurisdiction by no means

deprives labor of its basic rights, which are guarantee by Article II,

Section 18,[14] Article III, Section 8,[15] and Article XIII, Section 3

(supra), of the 1987 Constitution; and implemented by Articles 243

and 246 of the Labor Code,[16] relied on by the BLR Director and by

Kapisanan.

For, ICMC employees are not without recourse whenever there are

disputes to be settled. Section 31 of the Convention on the Privileges

and Immunities of the Specialized Agencies of the United Nations[17]

provides that each specialized agency shall make provision for

appropriate modes of settlement of: (a) disputes arising out of

contracts or other disputes of private character to which the

specialized agency is a party. Moreover, pursuant to Article IV of the

Memorandum of Agreement between ICMC and the Philippine

Government, whenever there is any abuse of privilege by ICMC, the

Government is free to withdraw the privileges and immunities

accorded. Thus:

Article IV. Cooperation with Government Authorities. 1. The

Commission shall cooperate at all times with the appropriate

authorities of the Government to ensure the observance of

Philippine laws, rules and regulations, facilitate the proper

administration of justice and prevent the occurrences of any

abuse of the privileges and immunities granted its officials and

alien employees in Article III of this Agreement to the

Commission.

2. In the event that the Government determines that there

has been an abuse of the privileges and immunities granted

under this Agreement, consultations shall be held between the

Government and the Commission to determine whether any

such abuse has occurred and, if so, the Government shall

withdraw the privileges and immunities granted the

Commission and its officials.

Neither are the employees of IRRI without remedy in case of dispute

with management as, in fact, there had been organized a forum for

better management-employee relationship as evidenced by the

formation of the Council of IRRI Employees and Management

(CIEM) wherein both management and employees were and still are

represented for purposes of maintaining mutual and beneficial

cooperation between IRRI and its employees. The existence of this

Union factually and tellingly belies the argument that Pres. Decree

No. 1620, which grants to IRRI the status, privileges and Immunities

of an international organization, deprives its employees of the right to

self-organization.

The immunity granted being from every form of legal process except

in so far as in any particular case they have expressly waived their

immunity, it is inaccurate to state that a certification election is

beyond the scope of that immunity for the reason that it is not a suit

against ICMC. A certification election cannot be viewed as an

independent or isolated process. It could trigger off a series of events

in the collective bargaining process together with related incidents

and/or concerted activities, which could inevitably involve ICMC in

the legal process, which includes any penal, civil and

administrative proceedings. The eventuality of Court litigation is

neither remote and from which international organizations are

precisely shielded to safeguard them from the disruption of their

functions. Clauses on jurisdictional immunity are said to be standard

provisions in the constitutions of international organizations. The

immunity covers the organization concerned, its property and its

assets. It is equally applicable to proceedings in personam and

proceedings in rem.[18]

We take note of a Manifestation, dated 28 September 1989, in the

ICMC Case (p. 161, Rollo), wherein TUPAS calls attention to the case
entitled International Catholic Migration Commission vs. NLRC, et

als., (G.R. No. 72222, 30 January 1989, 169 SCRA 606), and claims

that, having taken cognizance of that dispute (on the issue of payment

of salary for the unexpired portion of a six-month probationary

employment), the Court is now estopped from passing upon the

question of DOLE jurisdiction over ICMC.

We find no merit to said submission. Not only did the facts of said

controversy occur between 1983-1985, or before the grant to ICMC on

15 July 1988 of the status of a specialized agency with corresponding

immunities, but also because ICMC in that case did not invoke its

immunity and, therefore, may be deemed to have waived it, assuming

that during that period (1983-1985) it was tacitly recognized as

enjoying such immunity.

Anent the procedural issue raised in the IRRI Case, suffice it to state

that the Decision of the BLR Director, dated 15 February 1989, had

not become final because of a Motion for Reconsideration filed by

IRRI. Said Motion was acted upon only on 30 March 1989 when Rep.

Act No. 6715, which provides for direct appeals from the Orders of the

Med-Arbiter to the Secretary of Labor in certification election cases

either from the order or the results of the election itself, was already

in effect, specifically since 21 March 1989. Hence, no grave abuse of

discretion may be imputed to respondent Secretary of Labor in his

assumption of appellate jurisdiction, contrary to Kapisanans

allegations. The pertinent portion of that law provides:

Article 259. Any party to an election may appeal the order or

results of the election as determined by the Med-Arbiter directly

to the Secretary of Labor and Employment on the ground that

the rules and regulations or parts thereof established by the

Secretary of Labor and Employment for the conduct of the

election have been violated. Such appeal shall be decided within

15 calendar days (Emphasis ours).

En passant, the Court is gratified to note that the heretofore

antagonistic positions assumed by two departments of the executive

branch of government have been rectified and the resultant

embarrassment to the Philippine Government in the eyes of the

international community now, hopefully, effaced.

WHEREFORE, in G.R. No. 85750 (the ICMC Case), the Petition is

GRANTED, the Order of the Bureau of Labor Relations for

certification election is SET ASIDE, and the Temporary Restraining

Order earlier issued is made PERMANENT.

In G.R. No. 89331 (the IRRI Case), the Petition is Dismissed, no grave

abuse of discretion having been committed by the Secretary of Labor

and Employment in dismissing the Petition for Certification Election.

No pronouncement as to costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. Nos. L-58674-77 July 11, 1990

PEOPLE OF THE PHILIPPINES, petitioner,

vs.
HON. DOMINGO PANIS, Presiding Judge of the Court of First Instance of Zambales & Olongapo
City, Branch III and SERAPIO ABUG, respondents.

CRUZ, J:

The basic issue in this case is the correct interpretation of Article 13(b) of P.D. 442, otherwise known as
the Labor Code, reading as follows:

(b) Recruitment and placement' refers to any act of canvassing, enlisting, contracting,
transporting, hiring, or procuring workers, and includes referrals, contract services,
promising or advertising for employment, locally or abroad, whether for profit or not:
Provided, That any person or entity which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed engaged in recruitment and
placement.

Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and Olongapo
City alleging that Serapio Abug, private respondent herein, "without first securing a license from the
Ministry of Labor as a holder of authority to operate a fee-charging employment agency, did then and
there wilfully, unlawfully and criminally operate a private fee charging employment agency by charging
fees and expenses (from) and promising employment in Saudi Arabia" to four separate individuals named
therein, in violation of Article 16 in relation to Article 39 of the Labor Code. 1

Abug filed a motion to quash on the ground that the informations did not charge an offense because he
was accused of illegally recruiting only one person in each of the four informations. Under the proviso in
Article 13(b), he claimed, there would be illegal recruitment only "whenever two or more persons are in
any manner promised or offered any employment for a fee. " 2

Denied at first, the motion was reconsidered and finally granted in the Orders of the trial court dated June
24 and September 17, 1981. The prosecution is now before us on certiorari. 3

The posture of the petitioner is that the private respondent is being prosecuted under Article 39 in relation
to Article 16 of the Labor Code; hence, Article 13(b) is not applicable. However, as the first two cited
articles penalize acts of recruitment and placement without proper authority, which is the charge
embodied in the informations, application of the definition of recruitment and placement in Article 13(b)
is unavoidable.
The view of the private respondents is that to constitute recruitment and placement, all the acts mentioned
in this article should involve dealings with two or mre persons as an indispensable requirement. On the
other hand, the petitioner argues that the requirement of two or more persons is imposed only where the
recruitment and placement consists of an offer or promise of employment to such persons and always in
consideration of a fee. The other acts mentioned in the body of the article may involve even only one
person and are not necessarily for profit.

Neither interpretation is acceptable. We fail to see why the proviso should speak only of an offer or
promise of employment if the purpose was to apply the requirement of two or more persons to all the acts
mentioned in the basic rule. For its part, the petitioner does not explain why dealings with two or more
persons are needed where the recruitment and placement consists of an offer or promise of employment
but not when it is done through "canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring (of) workers.

As we see it, the proviso was intended neither to impose a condition on the basic rule nor to provide an
exception thereto but merely to create a presumption. The presumption is that the individual or entity is
engaged in recruitment and placement whenever he or it is dealing with two or more persons to whom, in
consideration of a fee, an offer or promise of employment is made in the course of the "canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers. "

The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of
workers. Any of the acts mentioned in the basic rule in Article 13(b) win constitute recruitment and
placement even if only one prospective worker is involved. The proviso merely lays down a rule of
evidence that where a fee is collected in consideration of a promise or offer of employment to two or
more prospective workers, the individual or entity dealing with them shall be deemed to be engaged in the
act of recruitment and placement. The words "shall be deemed" create that presumption.

This is not unlike the presumption in article 217 of the Revised Penal Code, for example, regarding the
failure of a public officer to produce upon lawful demand funds or property entrusted to his custody. Such
failure shall be prima facie evidence that he has put them to personal use; in other words, he shall be
deemed to have malversed such funds or property. In the instant case, the word "shall be deemed" should
by the same token be given the force of a disputable presumption or of prima facie evidence of engaging
in recruitment and placement. (Klepp vs. Odin Tp., McHenry County 40 ND N.W. 313, 314.)

It is unfortunate that we can only speculate on the meaning of the questioned provision for lack of records
of debates and deliberations that would otherwise have been available if the Labor Code had been enacted
as a statute rather than a presidential decree. The trouble with presidential decrees is that they could be,
and sometimes were, issued without previous public discussion or consultation, the promulgator heeding
only his own counsel or those of his close advisers in their lofty pinnacle of power. The not infrequent
results are rejection, intentional or not, of the interest of the greater number and, as in the instant case,
certain esoteric provisions that one cannot read against the background facts usually reported in the
legislative journals.

At any rate, the interpretation here adopted should give more force to the campaign against illegal
recruitment and placement, which has victimized many Filipino workers seeking a better life in a foreign
land, and investing hard- earned savings or even borrowed funds in pursuit of their dream, only to be
awakened to the reality of a cynical deception at the hands of theirown countrymen.

WHEREFORE, the Orders of June 24, 1981, and September 17, 1981, are set aside and the four
informations against the private respondent reinstated. No costs.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 84082 March 13, 1991

HELLENIC PHILIPPINE SHIPPING, INC., petitioner,

vs.
EPIFANIO C. SIETE and NATIONAL LABOR RELATIONS COMMISSION
(NLRC), respondents.

Prudencio Cruz for petitioner.

Robiso, Chavez & Romero for private respondent.

CRUZ, J.:

Challenged in this petition is the decision of the respondent NLRC holding Hellenic Philippine Shipping
Company liable for the illegal dismissal of Capt. Epifanio Siete, herein private respondent, and awarding
him salaries and other benefits corresponding to the unexpired portion of his employment contract.
Enforcement of this decision has meanwhile been held in abeyance pursuant to our temporary restraining
order dated August 3, 1988.

Siete was employed on May 22, 1985, as Master of M/V Houda G by Sultan Shipping Co., Ltd., through
its crewing agent, herein petitioner. He boarded the vessel on May 24, 1985, at Cyprus. From there, it
sailed on June 1, 1985, to El Ferrol, Spain, where it loaded cargo that it subsequently discharged at
Tripoli, Lebanon, from June 25-29, 1985. It then proceeded back to Cyprus, arriving there on June 30,
1985.

On July 8, 1985, Capt. Wilfredo Lim boarded the vessel and advised Siete that he had instructions from
the owners to take over its command. These instructions were confirmed by a telex sent by Sultan
Shipping to Siete on July 10, 1985. Neither Lim nor the telex indicated the reason for his relief. The
private respondent claims this information was also withheld from him by the petitioner upon his
repatriation to Manila.

On July 12, 1985, Siete filed a complaint against the petitioner for illegal dismissal and non-payment of
his salary and other benefits under their employment contract. On September 6, 1985, the petitioner
alleged in its answer that the complainant had been dismissed because of his failure to complete with the
instruction of Sultan Shipping to erase the timber load line on the vessel and for his negligence in the
discharge of the cargo at Tripoli that endangered the vessel and stevedores. Siete denied these averments
in his reply dated September 23, 1985, and reiterated that he had not earlier been informed of the cause of
his dismissal and repatriation, either in Cyprus or later in Manila.

After considering the position papers and documentary evidence of the parties, Administrator Tomas D.
Achacoso of the Philippine Overseas Employment Administration (POEA) dismissed the complaint,
holding that there was valid cause for Siete's removal. 2 The decision placed much value on the various
communications presented by the petitioner to show that Siete was indeed guilty of the charges that
justified his separation.
On January 4, 1988, the private respondent appealed to the NLRC, contending that the records presented
by the petitioner were prepared long after his dismissal and were especially suspect because they came
from persons in the employ of Sultan Shipping. He insisted that he was dismissed without even being
informed of the charges against him or given an opportunity to refute them. He added that, even assuming
he was negligent in the unloading of the cargo at Tripoli, this shortcoming did not warrant such a severe
penalty as his dismissal.

In its decision dated June 27, 1988, 3 the public respondent reversed the POEA Administrator, holding
that the dismissal violated due process and that the documents submitted by the petitioner were hearsay,
self-serving, and not verified. Accordingly, it disposed as follows:

A new decision is entered finding the dismissal of complainant as illegal. Respondent is hereby
ordered to pay to the complainant his salaries, wages and other benefits corresponding to the
unexpired portion of his employment contract with Sultan Shipping Company, Ltd., dated May
22, 1985.

The petitioner now faults this decision as having been reached with grave abuse of discretion. It contends
that the private respondent had been instructed to erase the timber load line on the vessel; that he had
indeed been negligent in supervising the unloading of the cargo at Tripoli, resulting in the replacement of
certain damaged equipment; and that he had not been denied due process, considering the summary nature
of the proceedings that had to be taken in view of the nature of his position. Moreover, assuming the
awards were justified, there was a mistake in their computation because the amount of $400.90 previously
collected by Siete had not been deducted.

Certiorari is denied.

The findings of fact of public respondent are conclusive on this Court, there being no showing that they
were reached arbitrarily. Substantial evidence has established that the private respondent was indeed not
notified of the charges against him and that no investigation was conducted to justify his dismissal.
Moreover, the petitioner has failed to prove that Siete had been instructed to erase the timber load lines
and that he had been negligent in the cargo unloading at Tripoli.

The Court notes that the reports submitted by the petitioner to prove its charges were all prepared after the
fact of Siete's dismissal and were signed by its own employees. 4

Their motives are necessarily suspect. The mere fact that they have made such reports does not itself
prove the charges, which were investigated ex parte, if at all. It is not denied that Siete was not informed
of the charges beforehand or that he was given an opportunity to refute them. Even after his arrival in
Manila, he was kept in the dark about the reason for his dismissal. The excuse of the petitioner that it
itself did not know why he was dismissed, being only a crewing agent of Sultan Shipping, deserves no
comment.

The Labor Code provides as follows:

Sec. 1. Security of tenure and due process. No worker shall be dismissed except for a just or
authorized cause provided by law and after due process.

Sec. 2. Notice of dismissal. Any employer who seeks to dismiss a worker shall furnish him a
written notice stating the particular acts or omission constituting the grounds for his dismissal. In
cases of abandonment of work, the notice shall be served at the worker's last known address.
 xxx xxx xxx

Sec. 5. Answer and hearing. The worker may answer the allegations stated against him in the
notice of dismissal within a reasonable period from receipt of such notice. The employer shall
afford the worker ample opportunity to be heard and to defend himself with the assistance of his
representative, if he so desires.

Sec. 6. Decision to dismiss. The employer shall immediately notify a worker in writing of a
decision to dismiss him stating clearly the reasons therefor.

The petitioner argues that whatever defects might have tainted the private respondent's dismissal were
subsequently cured when the charges against him were specified and sufficiently discussed in the position
papers submitted by the parties to the POEA. That argument is unacceptable. The issue before the POEA
was in fact the lack of due process in Siete's dismissal. The law requires that the investigation be
conducted before the dismissal, not after. That omission cannot be corrected by the investigation later
conducted by the POEA. As the Solicitor General correctly maintained, the due process requirement in
the dismissal process is different from the due process requirement in the POEA proceeding. Both
requirements must be separately observed.

While it is true that in Wenphil Corp. v. NLRC 5 and Rubberworld (Phils.) v. NLRC 6 the lack of due
process before the dismissal of the employee was deemed corrected by the subsequent administrative
proceedings where the dismissed employee was given a chance to be heard, those cases involved
dismissals that were later proved to be for a valid cause. The doctrine in those cases is not applicable to
the case at bar because our findings here is that the dismissal was not justified.

The argument that the afore-quoted provisions are not applicable to the private respondent because he was
a managerial employee must also be rejected. It is not correct to say that managerial employees may be
arbitrarily dismissed, at any time and without cause as established in an appropriate investigation.
Managerial employees, no less than rank-and-file laborers, are entitled to due process. Loss of confidence,
which is the usual ground for the removal of the managerial employee, must be established like any other
lawful cause. 7 Even if it be assumed that Siete was a managerial employee an issue which,
incidentally, was not earlier raised or resolved the petitioner has not satisfactorily proved the reason
for its supposed loss of confidence in him.

It is not true that the vessel would be left unattended if the captain were to be placed under investigation
because he would not have a ready replacement. The petitioner forgets that under Article 627 of the Code
of Commerce:

Art. 627. The sailing mate, as the second chief of the vessel and unless the ship agent does not
order otherwise, shall take the place of the captain in case of absence, sickness or death and shall
then assume all Ins powers, obligations and liabilities.

let alone the fact that in the particular case of Siete, there was actually a ready replacement for
him.1wphi1 This was Capt. Lim who, on instruction of Sultan Shipping, boarded the vessel on July 8,
1985, purposely to take over its command from Capt. Siete.

The Court reiterates the ruling that private employment agencies are jointly and severally liable with the
foreign-based employer for any violation of the recruitment agreement or the contract of
employment. 8 As a requirement for the issuance to it of a license to operate a private recruiting agency, a
verified undertaking was made by the petitioner that it would "assume joint and solidary liability with the
employer for all claims and liabilities which (might) arise in connection with the implementation of the
contract of employment." It cannot now contend that as a mere crewing agent it cannot be made to answer
for the liabilities of Sultan Shipping.

The reason for the above-mentioned requirement is obvious. Were the rule otherwise, employees with
legitimate demands against the employer would be helpless to enforce them because the latter has no
office or properties in this jurisdiction. Violation of the employment contract would remain unredressed.
It was precisely to correct this difficulty that the recruiting agent is now required, as a condition for the
issuance to it of a license to operate, to assure the employee that he has remedies available in this country
even if the culpable employer is beyond the reach of our courts.

It need only be noted that there was a slight error in the computation of the award due the private
respondent which he himself acknowledges. This was the failure to deduct from his total award the
amount of $400.90 he admitted having earlier collected in Cyprus. As corrected, the computation of the
total award should be as follows:

Monthly Basic Pay US$1,200.00

Monthly Allowance 500.00

Total Monthly Compensation US$1,700.00

One-Year Salary & Allowance

(US$1,700.00 x 12) US$20,400.00

Plus: One-Month Leave Pay 1,700.00

US$22,100.00

Less: Cash Advances:

Manila US$600.00

Spain 64.70

Lebanon 500.00

1,164.70
 Slapchest 28.36

Bal. of ship
cash fund 400.90

Total Deductions

1,593.96

Total Amount Due US$20,506.04

We are not persuaded that the NLRC committed grave abuse of discretion in reversing the findings of the
POEA sustaining the petitioner and dismissing the private respondent's complaint. On the contrary, we
agree that the private respondent was illegally dismissed because, first, he was not accorded a fair
investigation as required by law, and second, because the grounds invoked for his separation have not
been proved by the petitioner.

WHEREFORE, the challenged decision as above modified is AFFIRMED and the petition DISMISSED,
with costs against the petitioner. The temporary restraining order dated August 3,1988, is LIFTED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 113161 August 29, 1995

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
LOMA GOCE y OLALIA, DAN GOCE and NELLY D. AGUSTIN, accused. NELLY D.
AGUSTIN, accused-appellant.

REGALADO, J.:

On January 12, 1988, an information for illegal recruitment committed by a syndicate and in large scale,
punishable under Articles 38 and 39 of the Labor Code (Presidential Decree No. 442) as amended by
Section 1(b) of Presidential Decree No. 2018, was filed against spouses Dan and Loma Goce and herein
accused-appellant Nelly Agustin in the Regional Trial Court of Manila, Branch 5, alleging

That in or about and during the period comprised between May 1986 and June 25, 1987,
both dates inclusive, in the City of Manila, Philippines, the said accused, conspiring and
confederating together and helping one another, representing themselves to have the
capacity to contract, enlist and transport Filipino workers for employment abroad, did
then and there willfully and unlawfully, for a fee, recruit and promise employment/job
placement abroad, to (1) Rolando Dalida y Piernas, (2) Ernesto Alvarez y Lubangco, (3)
Rogelio Salado y Savillo, (4) Ramona Salado y Alvarez, (5) Dionisio Masaya y de
Guzman, (6) Dave Rivera y de Leon, (7) Lorenzo Alvarez y Velayo, and (8) Nelson
Trinidad y Santos, without first having secured the required license or authority from the
Department of Labor. 1

On January 21, 1987, a warrant of arrest was issued against the three accused but not one of them was
arrested. 2 Hence, on February 2, 1989, the trial court ordered the case archived but it issued a standing
warrant of arrest against the accused. 3

Thereafter, on learning of the whereabouts of the accused, one of the offended parties, Rogelio Salado,
requested on March 17, 1989 for a copy of the warrant of arrest. 4 Eventually, at around midday of
February 26, 1993, Nelly Agustin was apprehended by the Paraaque police. 5 On March 8, 1993, her
counsel filed a motion to revive the case and requested that it be set for hearing "for purposes of due
process and for the accused to immediately have her day in court" 6 Thus, on April 15, 1993, the trial
court reinstated the case and set the arraignment for May 3, 1993, 7 on which date of Agustin pleaded not
guilty 8 and the case subsequently went to trial.

Four of the complainants testified for the prosecution. Rogelio Salado was the first to take the witness
stand and he declared that sometime in March or April, 1987, he was introduced by Lorenzo Alvarez, his
brother-in-law and a co-applicant, to Nelly Agustin in the latter's residence at Factor, Dongalo,
Paraaque, Metro Manila. Representing herself as the manager of the Clover Placement Agency, Agustin
showed him a job order as proof that he could readily be deployed for overseas employment. Salado
learned that he had to pay P5,000.00 as processing fee, which amount he gave sometime in April or May
of the same year. He was issued the corresponding receipt. 9

Also in April or May, 1987, Salado, accompanied by five other applicants who were his relatives, went to
the office of the placement agency at Nakpil Street, Ermita, Manila where he saw Agustin and met the
spouses Dan and Loma Goce, owners of the agency. He submitted his bio-data and learned from Loma
Goce that he had to give P12,000.00, instead of the original amount of P5,000.00 for the placement fee.
Although surprised at the new and higher sum, they subsequently agreed as long as there was an
assurance that they could leave for abroad. 10

Thereafter, a receipt was issued in the name of the Clover Placement Agency showing that Salado and his
aforesaid co-applicants each paid P2,000.00, instead of the P5,000.00 which each of them actually paid.
Several months passed but Salado failed to leave for the promised overseas employment. Hence, in
October, 1987, along with the other recruits, he decided to go to the Philippine Overseas Employment
Administration (POEA) to verify the real status of Clover Placement Agency. They discovered that said
agency was not duly licensed to recruit job applicants. Later, upon learning that Agustin had been
arrested, Salado decided to see her and to demand the return of the money he had paid, but Agustin could
only give him P500.00. 11

Ramona Salado, the wife of Rogelio Salado, came to know through her brother, Lorenzo Alvarez, about
Nelly Agustin. Accompanied by her husband, Rogelio, Ramona went to see Agustin at the latter's
residence. Agustin persuaded her to apply as a cutter/sewer in Oman so that she could join her husband.
Encouraged by Agustin's promise that she and her husband could live together while working in Oman,
she instructed her husband to give Agustin P2,000.00 for each of them as placement fee, or the total sum
of P4,000.00. 12

Much later, the Salado couple received a telegram from the placement agency requiring them to report to
its office because the "NOC" (visa) had allegedly arrived. Again, around February, or March, 1987,
Rogelio gave P2,000.00 as payment for his and his wife's passports. Despite follow-up of their papers
twice a week from February to June, 1987, he and his wife failed to leave for abroad. 13

Complainant Dionisio Masaya, accompanied by his brother-in-law, Aquiles Ortega, applied for a job in
Oman with the Clover Placement Agency at Paraaque, the agency's former office address. There,
Masaya met Nelly Agustin, who introduced herself as the manager of the agency, and the Goce spouses,
Dan and Loma, as well as the latter's daughter. He submitted several pertinent documents, such as his bio-
data and school credentials. 14

In May, 1986, Masaya gave Dan Goce P1,900.00 as an initial downpayment for the placement fee, and in
September of that same year, he gave an additional P10,000.00. He was issued receipts for said amounts
and was advised to go to the placement office once in a while to follow up his application, which he
faithfully did. Much to his dismay and chagrin, he failed to leave for abroad as promised. Accordingly, he
was forced to demand that his money be refunded but Loma Goce could give him back only P4,000.00 in
installments. 15

As the prosecution's fourth and last witness, Ernesto Alvarez took the witness stand on June 7, 1993. He
testified that in February, 1987, he met appellant Agustin through his cousin, Larry Alvarez, at her
residence in Paraaque. She informed him that "madalas siyang nagpapalakad sa Oman" and offered him
a job as an ambulance driver at the Royal Hospital in Oman with a monthly salary of about $600.00 to
$700.00. 16

On March 10, 1987, Alvarez gave an initial amount of P3,000.00 as processing fee to Agustin at the
latter's residence. In the same month, he gave another P3,000.00, this time in the office of the placement
agency. Agustin assured him that he could leave for abroad before the end of 1987. He returned several
times to the placement agency's office to follow up his application but to no avail. Frustrated, he
demanded the return of the money he had paid, but Agustin could only give back P500.00. Thereafter, he
looked for Agustin about eight times, but he could no longer find her. 17

Only herein appellant Agustin testified for the defense. She asserted that Dan and Loma Goce were her
neighbors at Tambo, Paraaque and that they were licensed recruiters and owners of the Clover
Placement Agency. Previously, the Goce couple was able to send her son, Reynaldo Agustin, to Saudi
Arabia. Agustin met the aforementioned complainants through Lorenzo Alvarez who requested her to
introduce them to the Goce couple, to which request she acceded. 18

Denying any participation in the illegal recruitment and maintaining that the recruitment was perpetrated
only by the Goce couple, Agustin denied any knowledge of the receipts presented by the prosecution. She
insisted that the complainants included her in the complaint thinking that this would compel her to reveal
the whereabouts of the Goce spouses. She failed to do so because in truth, so she claims, she does not
know the present address of the couple. All she knew was that they had left their residence in 1987. 19

Although she admitted having given P500.00 each to Rogelio Salado and Alvarez, she explained that it
was entirely for different reasons. Salado had supposedly asked for a loan, while Alvarez needed money
because he was sick at that time. 20

On November 19, 1993, the trial court rendered judgment finding herein appellant guilty as a principal in
the crime of illegal recruitment in large scale, and sentencing her to serve the penalty of life
imprisonment, as well as to pay a fine of P100,000.00. 21

In her present appeal, appellant Agustin raises the following arguments: (1) her act of introducing
complainants to the Goce couple does not fall within the meaning of illegal recruitment and placement
under Article 13(b) in relation to Article 34 of the Labor Code; (2) there is no proof of conspiracy to
commit illegal recruitment among appellant and the Goce spouses; and (3) there is no proof that appellant
offered or promised overseas employment to the complainants. 22 These three arguments being
interrelated, they will be discussed together.

Herein appellant is accused of violating Articles 38 and 39 of the Labor Code. Article 38 of the Labor
Code, as amended by Presidential Decree No. 2018, provides that any recruitment activity, including the
prohibited practices enumerated in Article 34 of said Code, undertaken by non-licensees or non-holders of
authority shall be deemed illegal and punishable under Article 39 thereof. The same article further
provides that illegal recruitment shall be considered an offense involving economic sabotage if any of
these qualifying circumstances exist, namely, (a) when illegal recruitment is committed by a
syndicate, i.e., if it is carried out by a group of three or more persons conspiring and/or confederating with
one another; or (b) when illegal recruitment is committed in large scale, i.e., if it is committed against
three or more persons individually or as a group.

At the outset, it should be made clear that all the accused in this case were not authorized to engage in any
recruitment activity, as evidenced by a certification issued by Cecilia E. Curso, Chief of the Licensing and
Regulation Office of the Philippine Overseas Employment Administration, on November 10, 1987. Said
certification states that Dan and Loma Goce and Nelly Agustin are neither licensed nor authorized to
recruit workers for overseas
employment. 23 Appellant does not dispute this. As a matter of fact her counsel agreed to stipulate that she
was neither licensed nor authorized to recruit applicants for overseas employment. Appellant, however,
denies that she was in any way guilty of illegal recruitment. 24

It is appellant's defensive theory that all she did was to introduce complainants to the Goce spouses.
Being a neighbor of said couple, and owing to the fact that her son's overseas job application was
processed and facilitated by them, the complainants asked her to introduce them to said spouses.
Allegedly out of the goodness of her heart, she complied with their request. Such an act, appellant argues,
does not fall within the meaning of "referral" under the Labor Code to make her liable for illegal
recruitment.

Under said Code, recruitment and placement refers to any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not; provided, that any person or
entity which, in any manner, offers or promises for a fee employment to two or more persons shall be
deemed engaged in recruitment and placement. 25 On the other hand, referral is the act of passing along or
forwarding of an applicant for employment after an initial interview of a selected applicant for
employment to a selected employer, placement officer or bureau. 26

Hence, the inevitable query is whether or not appellant Agustin merely introduced complainants to the
Goce couple or her actions went beyond that. The testimonial evidence hereon show that she indeed
further committed acts constitutive of illegal recruitment. All four prosecution witnesses testified that it
was Agustin whom they initially approached regarding their plans of working overseas. It was from her
that they learned about the fees they had to pay, as well as the papers that they had to submit. It was after
they had talked to her that they met the accused spouses who owned the placement agency.

As correctly held by the trial court, being an employee of the Goces, it was therefore logical for appellant
to introduce the applicants to said spouses, they being the owners of the agency. As such, appellant was
actually making referrals to the agency of which she was a part. She was therefore engaging in
recruitment activity. 27

Despite Agustin's pretensions that she was but a neighbor of the Goce couple, the testimonies of the
prosecution witnesses paint a different picture. Rogelio Salado and Dionisio Masaya testified that
appellant represented herself as the manager of the Clover Placement Agency. Ramona Salado was
offered a job as a cutter/sewer by Agustin the first time they met, while Ernesto Alvarez remembered that
when he first met Agustin, the latter represented herself as "nagpapaalis papunta sa Oman." 28 Indeed,
Agustin played a pivotal role in the operations of the recruitment agency, working together with the Goce
couple.

There is illegal recruitment when one gives the impression of having the ability to send a worker
abroad." 29 It is undisputed that appellant gave complainants the distinct impression that she had the
power or ability to send people abroad for work such that the latter were convinced to give her the money
she demanded in order to be so employed. 30

It cannot be denied that Agustin received from complainants various sums for purpose of their
applications. Her act of collecting from each of the complainants payment for their respective passports,
training fees, placement fees, medical tests and other sundry expenses unquestionably constitutes an act of
recruitment within the meaning of the law. In fact, appellant demanded and received from complainants
amounts beyond the allowable limit of P5,000.00 under government regulations. It is true that the mere
act of a cashier in receiving money far exceeding the amount allowed by law was not considered per se as
"recruitment and placement" in contemplation of law, but that was because the recipient had no other
participation in the transactions and did not conspire with her co-accused in defrauding the
victims. 31 That is not the case here.

Appellant further argues that "there is no evidence of receipts of collections/payments from complainants
to appellant." On the contrary, xerox copies of said receipts/vouchers were presented by the prosecution.
For instance, a cash voucher marked as Exhibit D, 32 showing the receipt of P10,000.00 for placement fee
and duly signed by appellant, was presented by the prosecution. Another receipt, identified as Exhibit
E, 33 was issued and signed by appellant on February 5, 1987 to acknowledge receipt of P4,000.00 from
Rogelio and Ramona Salado for "processing of documents for Oman." Still another receipt dated March
10, 1987 and presented in evidence as Exhibit F, shows that appellant received from Ernesto Alvarez
P2,000.00 for "processing of documents for Oman." 34

Apparently, the original copies of said receipts/vouchers were lost, hence only xerox copies thereof were
presented and which, under the circumstances, were admissible in evidence. When the original writing
has been lost or destroyed or cannot be produced in court, upon proof of its execution and loss or
destruction, or unavailability, its contents may be proved by a copy or a recital of its contents in some
authentic document, or by the recollection of witnesses. 35

Even assuming arguendo that the xerox copies presented by the prosecution as secondary evidence are
not allowable in court, still the absence thereof does not warrant the acquittal of appellant. In People
vs. Comia, 36where this particular issue was involved, the Court held that the complainants' failure to ask
for receipts for the fees they paid to the accused therein, as well as their consequent failure to present
receipts before the trial court as proof of the said payments, is not fatal to their case. The complainants
duly proved by their respective testimonies that said accused was involved in the entire recruitment
process. Their testimonies in this regard, being clear and positive, were declared sufficient to establish
that factum probandum.

Indeed, the trial court was justified and correct in accepting the version of the prosecution witnesses, their
statements being positive and affirmative in nature. This is more worthy of credit than the mere
uncorroborated and self-serving denials of appellant. The lame defense consisting of such bare denials by
appellant cannot overcome the evidence presented by the prosecution proving her guilt beyond reasonable
doubt. 37

The presence of documentary evidence notwithstanding, this case essentially involves the credibility of
witnesses which is best left to the judgment of the trial court, in the absence of abuse of discretion therein.
The findings of fact of a trial court, arrived at only after a hearing and evaluation of what can usually be
expected to be conflicting testimonies of witnesses, certainly deserve respect by an appellate
court. 38 Generally, the findings of fact of the trial court on the matter of credibility of witnesses will not
be disturbed on appeal. 39

In a last-ditch effort to exculpate herself from conviction, appellant argues that there is no proof of
conspiracy between her and the Goce couple as to make her liable for illegal recruitment. We do not
agree. The evidence presented by the prosecution clearly establish that appellant confabulated with the
Goces in their plan to deceive the complainants. Although said accused couple have not been tried and
convicted, nonetheless there is sufficient basis for appellant's conviction as discussed above.
In People vs. Sendon, 40 we held that the non-prosecution of another suspect therein provided no ground
for the appellant concerned to fault the decision of the trial court convicting her. The prosecution of other
persons, equally or more culpable than herein appellant, may come later after their true identities and
addresses shall have been ascertained and said malefactors duly taken into custody. We see no reason
why the same doctrinal rule and course of procedure should not apply in this case.

WHEREFORE, the appealed judgment of the court a quo is hereby AFFIRMED in toto, with costs
against accused-appellant Nelly D. Agustin.

SO ORDERED.
 SECOND DIVISION

[G.R. No. 115350. September 30, 1996]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. RESTITUTO PABALAN y

CALILONG, accused-appellant.

[G.R. Nos. 117819-21. September 30, 1996]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. RESTITUTO PABALAN y

CALILONG, accused-appellant.

DECISION
REGALADO, J.:

Accused-Appellant Restituto C. Pabalan was charged with illegal recruitment in large scale and three
counts of estafa in separate informations filed before the Regional Trial Court of Valenzuela, Metro
Manila, Branch 171.[1]
The information in each case reads as follows:

Criminal Case No. 3089-V-93:

That during the period from April up to June 1993 in Valenzuela, Metro Manila and within the
jurisdiction of this Honorable Court, the above-named accused, representing himself to have the capacity
to contract, enlist and recruit workers for employment abroad, did then and there wilfully and unlawfully,
for a fee, recruit and promise employment/job placement in a large scale to HENRY LUCIANO y
PALLASIGUE, JUNE BARRERA Y PINEDA and MANUEL GARCIA Y RAGUA, without said
accused having secured first the necessary license or authority to engage in recruitment activity from the
Philippine Overseas Employment Administration (POEA), in violation of the aforementioned provision
of law.

Contrary to law.

Valenzuela, Metro Manila, August 18, 1993.[2]

Criminal Case No. 3090-V-93

That sometime in the month of May, 1993 in Valenzuela, Metro Manila and within the jurisdiction of this
Honorable Court, the above-named accused, defrauded and deceived one JUNE D. BARRERA, in the
following manner to wit: said accused, by means of false manifestations and fraudulent representation
which (he) made to the said complainant to the effect that he has the capacity and power to recruit and
employ complainant abroad and facilitate the necessary amount to meet the requirements thereof,
knowing said manifestations and representation to be false and fraudulent and w(e)re made only to induce
said complainant to give, as in fact, the latter did give and deliver to said accused cash money amounting
to P100,000.00, but said accused, once in possession of the same, with intent to defraud and deceive the
herein complainant, did then and there wilfully, unlawfully and feloniously misapply, misappropriate and
convert to his own personal use and benefit, despite demands made upon him to return the said amount
of P100,000.00 said accused failed and refused and still fails and refuses to do so, to the damage and
prejudice of the complainant in the aforementioned amount of P100,000.00.

Contrary to law.

Valenzuela, Metro Manila, August 18, 1993.[3]

Criminal Case No. 3091-V-93

That sometime in the month of April, 1993 in Valenzuela, Metro Manila and within the jurisdiction of
this Honorable Court, the above-named accused, defrauded and deceived one MANUEL R. GARCIA, in
the following manner to wit: said accused, by means of false manifestations and fraudulent representation
which (he) made to the said complainant to the effect that he has the capacity and power to recruit and
employ complainant abroad and facilitate the necessary amount to meet the requirements thereof,
knowing said manifestations and representation to be false and fraudulent and w(e)re made only to induce
said complainant to give, as in fact, the latter did give and deliver to said accused cash money amounting
to P26,000.00 and $1,600.00, said accused failed and refused and still fails and refuses to do so, to the
damage and prejudice of the complainant in the aforementioned amount of P26,000.00 and $1,600.00.

Contrary to law.

Valenzuela, Metro Manila, August 18, 1993.[4]

Criminal Case No. 3092-V-93

That sometime in the month of May, 1993 in Valenzuela, Metro Manila and within the jurisdiction of this
Honorable Court, the above-named accused, defrauded and deceived one HENRY LUCIANO y
PALLASIGUE, in the following manner to wit: said accused, by means of false manifestations and
fraudulent representation which (he) made to the said complainant to the effect that he has the capacity
and power to recruit and employ complainant abroad and facilitate the necessary amount to meet the
requirements thereof, knowing said manifestations and representation to be false and fraudulent and
w(e)re made only to induce said complainant to give, as in fact, the latter did give and deliver to said
accused cash money amounting to P100,000.00, but said accused, once in possession of the same, with
intent to defraud and deceive the herein complainant, did then and there wilfully, unlawfully and
feloniously misapply, misappropriate and convert to his own personal use and benefit, despite demands
made upon him to return the said amount of P100,000.00, said accused failed and refused and still fails
and refuses to do so, to the damage and prejudice of the complainant in the aforementioned amount
of P100,000.00.

Contrary to law.

Valenzuela, Metro Manila, August 18, 1993.[5]

 Upon arraignment, appellant pleaded not guilty to the offenses charged. As said indictments are
founded on the same facts, the cases were tried jointly. The prosecution presented the three complainants
in the criminal cases and they identified appellant as the person who perpetrated the crimes of illegal
recruitment and estafa against them.
According to June D. Barrera,[6] he met appellant on May 9, 1993 in Lacmit, Arayat,
Pampanga. Appellant told him that he could send him abroad and promised him a job in a construction
company in Japan. On that assurance, Barrera gave an initial amount of P2,000.00 on that same day to
appellant for the processing of his passport. Thereafter, he gave another P5,000.00 on May 15,
1993. On May 19, 1993, Barrera went to appellants residence in Marulas, Bulacan and gave
him P20,000.00 for the airplane ticket for the trip to Japan. These three amounts were covered by a
receipt for P27,000.00 breaking down the expenses as follows: services rendered, round-trip plane ticket,
travel tax and hotel reservations.[7]
Appellant subsequently explained to Barrera that they would have to use Saipan as an entry point
to Japan. Accordingly, Barrera gave appellant $500.00 as an additional payment for the plane ticket
to Saipan.
Accompanied by appellant, he and other job-seekers were able to reach Saipan where they stayed for
six days in a hotel. In Saipan, Barrera gave appellant another $2,000.00, supposedly required as show
money attesting to his financial capacity, in order to obtain an airplane ticket to Japan. They were able to
reach Japan but were detained immediately upon arrival for want of a job order to work in that
country. On the following day, they were sent back to the Philippines.
Back in this country, appellant kept on assuring Barrera that he would send him back to Japan, but
nothing materialized from his promises.Barrera disclosed to the court that he only borrowed money and
mortgaged his land to raise the necessary amounts demanded by appellant.
Henry Luciano testified[8] that he met appellant on May 9, 1993 in Lacmit, Arayat, Pampanga
through his cousin, June Barrera. Appellant told him that he could arrange employment for him abroad
for P100,000.00 and once he shall already be working, he should give him an additional P20,000.00. To
start the processing of the documents needed for his travel, Luciano gave P3,500.00 to appellant.[9] Then
on May 19, 1993, in the company of his cousin, Luciano gave P28,900.00 to appellant for the following
expenses services rendered, round-trip plane ticket, travel tax and hotel reservations.[10] Then, on May 27,
1993, he gave P12,000.00 more to appellant as additional payment for his airplane ticket.
Luciano, appellant and other job-seekers left Manila for Saipan on June 2, 1993 and stayed in said
territory for six days. In Saipan, Luciano again gave $2,000.00 to appellant for his airplane ticket
to Japan. However, upon reaching Japan, they were detained by the immigration officers at the airport in
Narita because they had no working visas. After staying overnight in a detention house, they were
deported to the Philippines.
Just like his cousin, Luciano declared that he had borrowed money and mortgaged his land just to
raise the amount needed for his placement overseas.
Manuel Garcia testified[11] December 3, 1993, 2-10.11 that he was introduced by a friend to appellant
sometime in March, 1993. Appellant promised him in that meeting that he could get him a job
abroad. On April 3, 1993, Garcia gave P26,000.00 to appellant as payment for the latters services in
finding him employment overseas.
Together with Barrera, Luciano, one Emerito Isip, one Aquilino Espino, Jr., and appellant himself,
Garcia left the Philippines for Saipan sometime in June of that year. In Saipan, he gave an additional
$1,600.00 to appellant as requested by the latter. Thereafter, upon instructions of appellant, he and Espino
left one day ahead of the group in going to Japan. Just like the misfortune that would befall their other
companions, the two were apprehended upon reaching the airport in Japan and were later deported to
the Philippines.
It is undisputed that appellant was not qualified to recruit workers. He admitted the authenticity and
due execution of the certification issued by the Philippine Overseas Employment Administration (POEA)
to the effect that he was not licensed or authorized by the Administration to recruit workers for overseas
employment.[12]
However, he anchored his defense on a total denial of the illegal acts imputed to him. Appellant
contended that he was never engaged in illegal recruitment when he dealt with Barrera and Luciano, and
that he had no transaction whatsoever with Garcia.
In his testimony in the lower court,[13] appellant claimed that he first met Barrera and Luciano in the
last week of April, 1993 when the duo came to his house with a letter from a former mayor of Arayat
requesting him to help them get tourist visas for Japan. They told him that they wanted to go to Japan as
tourists.
Knowing that it was hard to get a tourist visa at the Japanese Embassy, he advised them to first go
to Saipan and then proceed from there to Japan. He explained that it was easy to go
to Japan through Saipan because foreigners who stay in Saipan for one week can enter Japan as transit
passengers for seventy-two hours and secure short pass visas for their use.
After the two had gotten their passports, appellant accompanied them to the Philippine Travel
Agency at Ermita, Manila to buy their round-trip airplane tickets for Saipan. Appellant also bought a
ticket for himself because he allegedly had a friend in Japan whom he wanted to visit.
In Saipan, they stayed at the MMF Hotel for seven days and paid for their own expenses. It was also
in Saipan where they bought their tickets for Japan. Upon entering Japan, however, they were brought to
the Narita rest house immigration jail. They were denied short pass visas because of tight security in
connection with the preparations for the wedding of the Emperors son. Subsequently, they were
expatriated from Japan.
Appellant, on the other hand, claimed that it was only in Saipan that he met Garcia and disclaimed
having promised a job to the latter. He further denied having received any money from complainants, but
admitted that the signatures in the receipts are his. After joint trial duly conducted, the lower court found
appellant guilty of all the charges and rendered the following judgment:

WHEREFORE, finding accused Restituto Pabalan y Calilong:

CRIMINAL CASE NO. 3089-V-93

Guilty beyond reasonable doubt of Illegal Recruitment (in) large scale, he is hereby sentenced to suffer
the penalty of RECLUSION PERPETUA and to pay a fine of ONE HUNDRED THOUSAND PESOS
(P100,000.00) and the costs of suit.

CRIMINAL CASE NO. 3090-V-93

Guilty beyond reasonable doubt of Estafa defined and punished under Article 315 (2) (a) of the Revised
Penal Code, he is hereby sentenced to suffer an indeterminate imprisonment from EIGHT (8) YEARS and
ONE (1) DAY of Prision Mayor, as minimum, to FOURTEEN (14) YEARS of Reclusion Temporal, as
maximum, with the accessory penalties prescribed by law and to pay the costs.

The accused is hereby ordered to pay the offended party the sum of P89,000.00.
CRIMINAL CASE NO. 3091-V-93

Guilty beyond reasonable doubt of Estafa defined and punished under Article 315 (2) (a) of the Revised
Penal Code, he is hereby sentenced to suffer an indeterminate imprisonment from SIX (6) YEARS of
Prision Correccional, as minimum, to TWELVE (12) YEARS of Prision Mayor, as maximum, with the
accessory penalties prescribed by law and to pay the costs.

The accused is ordered to pay the offended party the sum of P66,000.00

CRIMINAL CASE NO. 3092-V-93

Guilty beyond reasonable doubt of Estafa defined and punished under Article 315 (2) (a) of the Revised
Penal Code, he is hereby sentenced to suffer an indeterminate imprisonment from EIGHT (8) YEARS and
ONE (10) DAY of Prision Mayor, as minimum, to FIFTEEN (15) YEARS of Reclusion Temporal, as
maximum, with the accessory penalties prescribed by law and to pay the costs.

The accused is ordered to pay the offended party the sum of P94,400.00.

SO ORDERED.[14]

Hence, this appeal, on the ground that the trial court erred in convicting appellant of the crimes of
illegal recruitment in large scale and estafa despite the absence of evidence showing his guilt beyond
reasonable doubt.[15] Upon motion of appellant, the First Division of this Court ordered the consolidation
of G.R. Nos. 117819-21 (the appeal in Criminal Case Nos. 3090-V-93, 3091-V-93 and 3092-V-93) with
G.R. No. 115350 (the appeal in Criminal Case No. 3089-V-93).[16] His brief filed thereafter presents a
slew of arguments seeking to overturn his conviction in the aforementioned cases.
Firstly, appellant posits that he cannot be convicted of illegal recruitment because of the absence of
receipts indicating that complainants did pay him fees in consideration of his services.[17]
Although not all of the amounts testified to by complainants were covered by receipts, the fact that
there were no receipts for some of the amounts delivered to him does not mean that appellant did not
accept or receive such payments. This Court has ruled in several cases that the absence of receipts in a
criminal case for illegal recruitment does not warrant the acquittal of the accused and is not fatal to the
case of the prosecution.[18] As long as the witnesses had positively shown through their respective
testimonies that the accused is the one involved in the prohibited recruitment, he may be convicted of the
offense despite the want of receipts.
The Statute of Frauds and the rules of evidence do not require the presentation of receipts in order to
prove the existence of a recruitment agreement and the procurement of fees in illegal recruitment
cases. The amounts may consequently be proved by the testimony of witnesses.
The finding of illegal recruitment in large scale is justified whenever the following elements are
present: (1) that the offender engages in the recruitment and placement of workers as defined in Article
13(b) of the Labor Code or in any prohibited activities under Article 34 of the same code; (2) that the
offender does not have a license or authority to recruit and deploy workers, either locally or overseas; and
(3) that the offender commits the same against three (3) or more persons, individually or as a
group.[19] Article 13(b) characterizes recruitment and placement as any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract
services, promising or advertising for employment, locally or abroad, whether for profit or not.
 It will readily be noted, as earlier explained, that the exhibition of receipts is not necessary for the
successful prosecution of the offense of illegal recruitment in large scale. Since all of the above elements
were satisfactorily proven by the prosecution before the court a quo through the testimonies of its
witnesses and by competent documents, then the non-presentation of receipts should not in any way
hinder the conviction of appellant.
Secondly, appellant faults the lower court for giving credence to the testimony of complainant
Garcia. He claims that aside from the testimony of Garcia, there is no other evidence presented by the
prosecution to show that there was a recruitment agreement between them and that money was received
by appellant. His alleged companion in Saipan, Aquilino Espino, was not even presented to corroborate
his story.[20]
The fact that no additional evidence was presented, aside from the testimony of Garcia, will not
militate against his credibility. Corroborative evidence is necessary only when there are reasons to
warrant the suspicion that the witness falsified the truth or that his observations are
incorrect.[21] Complainant Garcias straightforward and clear testimony renders unnecessary the
presentation of documents and other evidence to prove that appellant was the one who engaged him to
work abroad.
Neither will the failure of the prosecution to present Espino diminish the credibility of Garcia. It has
been held that the non-presentation of certain witnesses by the prosecution is not a plausible defense and
the matter of whom to present as witnesses for the prosecution lies in the sound discretion of the
prosecutor handling the case.[22] Thus no adverse inference against the case of the People can be deduced
from the failure of the prosecution to present Espino. Besides, if the prosecution had opted to present
Espino, his testimony would merely be corroborative and can thus be dispensed with.[23]
Appellant further attacks the credibility of Garcia by theorizing that it was preposterous to buy the
latters airplane ticket on March 29, 1993 when, according to his own testimony, he met appellant only on
April 3, 1993.[24] It is, however, well settled that minor discrepancies in the testimony of a prosecution
witness do not affect his credibility.[25]
The alleged inconsistencies are too insignificant to adversely affect the testimony of witness
Garcia. Given the natural frailties of the human mind and its incapacity to assimilate all material details of
a given incident, slight inconsistencies and variances in the declarations of a witness hardly weaken their
probative value.[26]
Lastly, appellant asserts that his version should have been believed by the court below since the fact
that complainants reached Japan indicates that he did not recruit them.[27] It will be observed therefrom
that appellants arguments seeking to disprove the conclusion on illegal recruitment actually assail the
stamp of confidence placed by the court a quo upon the testimonies of the prosecution witnesses.
The best arbiter on the issue of the credibility of the prosecution witnesses and of appellant is the
trial court. When the inquiry is one of credibility of witnesses, appellate courts will generally not disturb
the findings of the trial court, considering that the latter is in a better position to decide the question,
having heard the witnesses themselves and observed their deportment and manner of testifying during the
trial, unless it plainly overlooked certain facts of substance and value which, if considered, might affect
the result of the case.[28]
After a thorough and painstaking review, the Court is satisfied that there is nothing in the records of
these cases which signify that the trial court might have ignored or misappreciated substantial facts as
would warrant a reversal of its findings and conclusions.
All the witnesses for the prosecution categorically testified that it was appellant who promised them
that he could arrange for and facilitate their employment abroad. We quote with approval the conclusion
of the lower court that x x x the narration of the prosecution witnesses Henry Luciano, June Barrera and
Manuel Garcia are the more believable story. Their testimonies appeared credible. There is no reason not
to believe or discard their testimonies. There is no sign that they testified falsely against the accused.[29]
Denials of an accused cannot be given greater evidentiary weight than the positive declarations of
credible witnesses who testify on affirmative matters.[30] Verily, the trial court was correct in accepting
the version of the prosecution witnesses as their statements are positive and affirmative in nature. Their
testimonies are more worthy of credit that the uncorroborated[31] and self-serving denials of appellant.
Just like the lower court, we find it hard to believe the story presented by appellant that he merely
helped Barrera and Luciano in going to Japan as tourists. Barrera was without gainful work and Luciano
was merely a farmer[32] at the time they met appellant. It is incompatible with human behaviour and
contrary to ordinary experience that people already in dire financial straits will make their lives more
miserable by borrowing money and mortgaging their properties just so they can visit and tour a foreign
land.
Appellant finally stresses that if indeed he was guilty of illegal recruitment, he could have simply
changed his residence to evade prosecution.[33] This argument is, unfortunately, purely hypothetical and
clearly non sequitur. It cannot, by itself, strengthen his credibility or weaken those of the prosecutions
witnesses. We have already ruled that non-flight is not a conclusive proof of innocence because such
inaction may be due to several factors.[34]
We now come to appellants supporting arguments on his supposed innocence in the estafa cases. On
these charges, appellant claims that the evidence and circumstances on record do not show any act of
deceit on his part, and that the money received from Barrera and Luciano were utilized in procuring their
passports and were therefore not misappropriated.[35]
Appellant was charged with and convicted for violating Article 315(2)(a) of the Revised Penal Code
which provides for one of the modes of committing estafa, thus:

2. By means of any of the following false pretenses or fraudulent acts executed prior to or simultaneously
with the commission of the fraud:

(a) By using fictitious name, or falsely pretending to possess power, influence, qualifications, property,
credit, agency, business or imaginary transactions, or by means of other similar deceits.

Deceit in the instant cases is shown by the false pretenses by which appellant deluded complainants
into believing that he had the power and qualifications to send people abroad for employment.[36] Through
this hoax, he was able to convince complainants to surrender their money to him in the vain hope, as it
turned out, of securing employment abroad.
The reliance of appellant on the absence of the element of misappropriation is sorely misplaced and
decidedly off-tangent. A reading of the law on estafa will readily show that misappropriation or
conversion is referred to and is applicable in estafa under Article 315 (1)(b), and not to that in Article
315(2)(a).
He also avers that his conviction in the second estafa case was without legal basis because there was
no other evidence, documentary or testimonial, establishing the crime of estafa except for the testimony
of Garcia.[37]
Although this contention has already been disposed of in the discussions above, it also bears mention
that the testimony of a single prosecution witness, where credible and positive, is sufficient to prove
beyond reasonable doubt the guilt of the accused.[38] There is no law which requires that the testimony of
a single witness has to be corroborated, except where expressly mandated in determining the value and
credibility of evidence. Witnesses are to be weighed, not numbered.[39]
 A final observation and reminder on the penalties imposed by the lower court.
When the offense of illegal recruitment constitutes economic sabotage, as in the present case of
illegal recruitment in large scale, the penalty provided by law is life imprisonment and a fine of one
hundred thousand pesos (P100,000.00).[40] Reclusion perpetua was never prescribed by the law as the
punishment for such crime. This Court has repeatedly emphasized the differences between the penalty
of reclusion perpetua and life imprisonment in numerous decisions and administrative circulars. We do
not wish to again belabor such distinctions in this decision, but we do expect all judges to take note of the
difference and impose the proper penalty with the correct nomenclature.
On the imposable penalty for the particular felony of estafa in the present cases, we are constrained
to discuss the pertinent provision of Article 315 of the Revised Penal Code. Under the said article, an
accused found guilty of estafa shall suffer:

1st. The penalty of prision correccional in its maximum period to prision mayor in its minimum period, if
the amount of the fraud is over 12,000 but does not exceed 22,000 pesos, and if such amount exceeds the
latter sum, the penalty provided in this paragraph shall be imposed in its maximum period, adding one
year for each additional 10,000 pesos, but the total penalty which may be imposed shall not exceed
twenty years. In such case and in connection with the accessory penalties which may be imposed and for
the purpose of the other provisions of this Code, the penalty shall be termed prision mayor or reclusion
temporal, as the case may be.[41]

The amount of the fraud in Criminal Case No. 3090-V-93 is P88,500.00;[42] Criminal Case No. 3091-
V-93, P66,000.00; and in Criminal Case No. 3092-V-93, P94,400.00. Subtracting P22,000.00 from each
of the aforesaid amounts will leave P66,500.00 P44,000.00 and P72,400.00 in the respective criminal
cases. To determine the additional years of imprisonment prescribed in the above article, each of the latter
amounts shall be divided by P10,000.00, disregarding any amount below P10,000.00. Thus, in the
foregoing estafa cases, the incremental penalties of six (6) years, four (4) years and seven (7) years should
be correspondingly added to the maximum period of the basic penalty provided in the aforequoted
paragraph of Article 315.
Applying the mandate of the Indeterminate Sentence Law, the maximum penalty shall therefore be
taken from the maximum period of said basic penalty in Article 315 as augmented by the additional years
of imprisonment, while the minimum term of the indeterminate sentence shall be within the range of the
penalty next lower in degree to that provided by law without considering the incremental penalty for the
amounts in excess of P22,000.00. That penalty immediately lower in degree is prision correccional in its
minimum and medium periods,[43] with a duration of six (6) months and one (1) day to four (4) years and
two (2) months.
Based on the foregoing considerations, the lower court incorrectly imposed the penalty of reclusion
perpetua in the illegal recruitment case, and likewise erred in fixing the minimum terms of the
indeterminate sentences in the estafa cases.
WHEREFORE, the judgment of the court a quo finding accused-appellant Restituto Pabalan guilty
beyond reasonable doubt of the crimes of illegal recruitment in large scale (Criminal Cases No. 3089-V-
93) and estafa (Criminal Cases Nos. 3090-V-93, 3091-V-93 and 3092-V-93) is hereby AFFIRMED, but
the respective penalties in said cases are hereby MODIFIED, to wit:

1. In Criminal Case No. 3089-V-93, the penalty of life imprisonment is imposed on accused-appellant,
instead of reclusion perpetua which is deleted by amendment.
2. In Criminal Case No. 3090-V-93, the award of P89,000.00 is reduced to P88,500.00. Accused-
appellant shall serve an indeterminate sentence of four (4) years and two (2) months of prision
correccional, as minimum, to fourteen (14) years of reclusion temporal, as maximum.

3. In Criminal Case No. 3091-V-93, accused-appellant shall serve an indeterminate sentence of four (4)
years and two (2) months of prision correccional, as minimum, to twelve (12) years of prision mayor, as
maximum.

4. In Criminal Case No. 3092-V-93, accused-appellant shall serve an indeterminate sentence of four (4)
years and two (2) months of prision correccional, as minimum, to fifteen (15) years of reclusion
temporal, as maximum.

In the service of the aforementioned sentences, the provisions of Article 70 of the Revised Penal
Code shall be observed.
SO ORDERED.
 SECOND DIVISION

[G.R. No. 109583. September 5, 1997]

TRANS ACTION OVERSEAS CORPORATION, petitioner, vs. THE HONORABLE

SECRETARY OF LABOR, ROSELLE CASTIGADOR, JOSEFINA MAMON, JENELYN
CASA, PEACHY LANIOG, VERDELINA BELGIRA, ELMA FLORES, RAMONA
LITURCO, GRACE SABANDO, GLORIA PALMA, AVELYN ALVAREZ,
CANDELARIA NONO,NITA BUSTAMANTE, CYNTHIA ARANDILLO, SANDIE
AGUILAR, DIGNA PANAGUITON, VERONICA BAYOGOS, JULIANITA ARANADOR,
LEONORA CABALLERO, NANCY BOLIVAR, NIMFA BUCOL, ZITA GALINDO,
ESTELITA BIOCOS, MARJORIE MACATE, RUBY SEPULVIDA, ROSALIE SONDIA,
NORA MAQUILING, PAULINA CORDERO, LENIROSE ABANGAN, SELFA PALMA,
ANTONIA NAVARRO, ELSIE PENARUBIA, IRMA SOBREQUIL, SONY JAMUAT,
CLETA MAYO, respondents.

DECISION
ROMERO, J.:

The issue presented in the case at bar is whether or not the Secretary of Labor and Employment has
jurisdiction to cancel or revoke the license of a private fee-charging employment agency.
From July 24 to September 9, 1987, petitioner Trans Action Overseas Corporation, a private fee-
charging employment agency, scoured Iloilo City for possible recruits for alleged job vacancies in
Hongkong. Private respondents sought employment as domestic helpers through petitioners employees,
Luzviminda Aragon, Ben Hur Domincil and his wife Cecille. The applicants paid placement fees ranging
from P1,000.00 to P14,000.00, but petitioner failed to deploy them. Their demands for refund proved
unavailing; thus, they were constrained to institute complaints against petitioner for violation of Articles
32 and 34(a)[1] of the Labor Code, as amended.
Petitioner denied having received the amounts allegedly collected from respondents, and averred that
Aragon, whose only duty was to pre-screen and interview applicants, and the spouses Domincil were not
authorized to collect fees from the applicants. Accordingly, it cannot be held liable for the money claimed
by respondents. Petitioner maintains that it even warned respondents not to give any money to
unauthorized individuals.
POEA Regional Extension Unit Coordinator Edgar Somes testified that although he was aware that
petitioner collected fees from respondents, the latter insisted that they be allowed to make the payments
on the assumption that it could hasten their deployment abroad. He added that Mrs. Honorata Manliclic, a
representative of petitioner tasked to oversee the conduct of the interviews, told him that she was leaving
behind presigned receipts to Aragon as she cannot stay in Iloilo City for the screening of the
applicants. Manliclic, however, denied this version and argued that it was Somes who instructed her to
leave the receipts behind as it was perfectly alright to collect fees.
On April 5, 1991, then Labor Undersecretary Nieves R. Confesor rendered the assailed order, the
dispositive portion of which reads:

WHEREFORE, respondents are hereby ordered to pay, jointly and severally, the following claims:
1. Rosele Castigador P14,000.00

2. Josefina Mamon 3,000.00

3. Jenelyn Casa 3,000.00

4. Peachy Laniog 13,500.00

5. Verdelina Belgira 2,000.00

6. Elma Flores 2,500.00

7. Ramona Liturco 2,500.00

8. Grace Sabando 3,500.00

9. Gloria Palma 1,500.00

10. Avelyn Alvarez 1,500.00

11. Candelaria Nono 1,000.00

12. Nita Bustamante 5,000.00

13. Cynthia Arandillo 1,000.00

14. Sandie Aguilar 3,000.00

15. Digna Panaguiton 2,500.00

16. Veronica Bayogos 2,000.00

17. Sony Jamuat 4,500.00

18. Irma Sobrequil 2,000.00

19. Elsie Penarubia 2,000.00

20. Antonia Navarro 2,000.00

21. Selfa Palma 3,000.00

22. Lenirose Abangan 13,300.00

23. Paulina Cordero 1,400.00

24. Nora Maquiling 2,000.00

25. Rosalie Sondia 2,000.00

26. Ruby Sepulvida 3,500.00

27. Marjorie Macate 1,500.00

28. Estelita Biocos 3,000.00

29. Zita Galindo 3,500.00

30. Nimfa Bucol 1,000.00

31. Nancy Bolivar 2,000.00

32. Leonora Caballero 13,900.00

33. Julianita Aranador 14,000.00

The complaints of Ma. Luz Alingasa, Nimfa Perez, and Cleta Mayo are hereby dismissed in view of
their desistance.
The following complaints are hereby dismissed for failure to appear/prosecute:

1. Jiyasmin Bantillo 6. Edna Salvante

2. Rosa de Luna Senail 7. Thelma Beltiar

3. Elnor Bandojo 8. Cynthia Cepe

4. Teresa Caldeo 9. Rosie Pavillon

5. Virginia Castroverde

The complaints filed by the following are hereby dismissed for lack of evidence:

1. Aleth Palomaria 5. Mary Ann Beboso

2. Emely Padrones 6. Josefina Tejero

3. Marybeth Aparri 7. Bernadita Aprong

4. Lenia Biona 8. Joji Lull

Respondent agency is liable for twenty eight (28) counts of violation of Article 32 and five (5) counts of
Article 34 (a) with a corresponding suspension in the aggregate period of sixty six (66)
months. Considering however, that under the schedule of penalties, any suspension amounting to a period
of 12 months merits the imposition of the penalty of cancellation, the license of respondent TRANS
ACTION OVERSEAS CORPORATION to participate in the overseas placement and recruitment of
workers is hereby ordered CANCELLED, effective immediately.
SO ORDERED.[2] (Underscoring supplied)

On April 29, 1991, petitioner filed its Motion for Temporary Lifting of Order of Cancellation
alleging, among other things, that to deny it the authority to engage in placement and recruitment
activities would jeopardize not only its contractual relations with its foreign principals, but also the
welfare, interests, and livelihood of recruited workers scheduled to leave for their respective
assignments. Finally, it manifested its willingness to post a bond to insure payment of the claims to be
awarded, should its appeal or motion be denied.
Finding the motion to be well taken, Undersecretary Confesor provisionally lifted the cancellation of
petitioners license pending resolution of its Motion for Reconsideration filed on May 6, 1991. On January
30, 1992, however, petitioners motion for reconsideration was eventually denied for lack of merit, and the
April 5, 1991, order revoking its license was reinstated.
Petitioner contends that Secretary Confesor acted with grave abuse of discretion in rendering the
assailed orders on alternative grounds, viz.: (1) it is the Philippine Overseas Employment Administration
(POEA) which has the exclusive and original jurisdiction to hear and decide illegal recruitment cases,
including the authority to cancel recruitment licenses, or (2) the cancellation order based on the 1987
POEA Schedule of Penalties is not valid for non-compliance with the Revised Administrative Code of
1987 regarding its registration with the U.P. Law Center.
Under Executive Order No. 797[3] (E.O. No. 797) and Executive Order No. 247 (E.O. No. 247),[4] the
POEA was established and mandated to assume the functions of the Overseas Employment Development
Board (OEDB), the National Seamen Board (NSB), and the overseas employment function of the Bureau
of Employment Services (BES). Petitioner theorizes that when POEA absorbed the powers of these
agencies, Article 35 of the Labor Code, as amended, was rendered ineffective.
The power to suspend or cancel any license or authority to recruit employees for overseas
employment is vested upon the Secretary of Labor and Employment. Article 35 of the Labor Code, as
amended, which provides:

ART. 35. Suspension and/or Cancellation of License or Authority. - The Minister of Labor shall have the
power to suspend or cancel any license or authority to recruit employees for overseas employment for
violation of rules and regulations issued by the Ministry of Labor, the Overseas Employment
Development Board, and the National Seamen Board, or for violation of the provisions of this and other
applicable laws, General Orders and Letters of Instructions.

In the case of Eastern Assurance and Surety Corp. v. Secretary of Labor,[5] we held that:

The penalties of suspension and cancellation of license or authority are prescribed for violations of the
above quoted provisions, among others. And the Secretary of Labor has the power under Section 35 of the
law to apply these sanctions, as well as the authority, conferred by Section 36, not only to restrict and
regulate the recruitment and placement activities of all agencies, but also to promulgate rules and
regulations to carry out the objectives and implement the provisions governing said activities. Pursuant to
this rule-making power thus granted, the Secretary of Labor gave the POEA,[6] on its own initiative or
upon filing of a complaint or report or upon request for investigation by any aggrieved person, x x
(authority to) conduct the necessary proceedings for the suspension or cancellation of the license or
authority of any agency or entity for certain enumerated offenses including -

1) the imposition or acceptance, directly or indirectly, of any amount of money, goods or services, or any
fee or bond in excess of what is prescribed by the Administration, and
2) any other violation of pertinent provisions of the Labor Code and other relevant laws, rules and
regulations.[7]

The Administrator was also given the power to order the dismissal of the case or the suspension of
the license or authority of the respondent agency or contractor or recommend to the Minister the
cancellation thereof.[8] (Underscoring supplied)
This power conferred upon the Secretary of Labor and Employment was echoed in People v.
Diaz,[9] viz.:

A non-licensee or non-holder of authority means any person, corporation or entity which has not been
issued a valid license or authority to engage in recruitment and placement by the Secretary of Labor, or
whose license or authority has been suspended, revoked or cancelled by the POEA or the Secretary.
(Underscoring supplied)

In view of the Courts disposition on the matter, we rule that the power to suspend or cancel any
license or authority to recruit employees for overseas employment is concurrently vested with the POEA
and the Secretary of Labor.
As regards petitioners alternative argument that the non-filing of the 1987 POEA Schedule of
Penalties with the UP Law Center rendered it ineffective and, hence, cannot be utilized as basis for
penalizing them, we agree with Secretary Confesors explanation, to wit:

On the other hand, the POEA Revised Rules on the Schedule of Penalties was issued pursuant to Article
34 of the Labor Code, as amended. The same merely amplified and particularized the various violations
of the rules and regulations of the POEA and clarified and specified the penalties therefore (sic). Indeed,
the questioned schedule of penalties contains only a listing of offenses. It does not prescribe additional
rules and regulations governing overseas employment but only detailed the administrative sanctions
imposable by this Office for some enumerated prohibited acts.

Under the circumstances, the license of the respondent agency was cancelled on the authority of
Article 35 of the Labor Code, as amended, and not pursuant to the 1987 POEA Revised Rules on
Schedule of Penalties.[10]
WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED. Accordingly,
the decision of the Secretary of Labor dated April 5, 1991, is AFFIRMED. No costs.
SO ORDERED.
 THIRD DIVISION

[G.R. No. 125044. July 13, 1998]

IMELDA DARVIN, petitioner, vs. HON. COURT OF APPEALS and PEOPLE OF THE
PHILIPPINES,respondents.

DECISION
ROMERO, J.:

Before us is a petition for review of the decision of the Court of Appeals in C.A.-G.R. CR. No.
15624 dated January 31, 1996,[1] which affirmed in toto the judgment of the Regional Trial Court, Branch
19, Bacoor, Cavite, convicting accused-appellant, Imelda Darvin for simple illegal recruitment under
Article 38 and Article 39, in relation to Article 13 (b) and (c), of the Labor Code, as amended.
Accused-appellant was charged under the following information:

That on or about the 13th day of April 1992, in the Municipality of Bacoor, Province of Cavite,
Philippines and within the jurisdiction of this Honorable Court, the above-named accused, through
fraudulent representation to one Macaria Toledo to the effect that she has the authority to recruit workers
and employees for abroad and can facilitate the necessary papers in connection thereof, did, then and
there, wilfully, unlawfully and feloniously, hire, recruit and promise a job abroad to one Macaria Toledo,
without first securing the necessary license and permit from the Philippine Overseas Employment
Administration to do so, thereby causing damage and prejudice to the aforesaid Macaria Toledo.

Contrary to law.[2]

The evidence for the prosecution, based on the testimony of private respondent, Macaria Toledo,
shows that sometime in March, 1992, she met accused-appellant Darvin in the latters residence at
Dimasalang, Imus, Cavite, through the introduction of their common friends, Florencio Jake Rivera and
Leonila Rivera. In said meeting, accused-appellant allegedly convinced Toledo that by giving her
P150,000.00, the latter can immediately leave for the United States without any appearance before the
U.S. embassy.[3] Thus, on April 13, 1992, Toledo gave Darvin the amount of P150,000.00, as evidenced
by a receipt stating that the amount of P150,000.00 was for U.S. Visa and Air fare. [4] After receiving the
money, Darvin assured Toledo that she can leave within one week. However, when after a week, there
was no word from Darvin, Toledo went to her residence to inquire about any development, but could not
find Darvin. Thereafter, on May 7, 1992, Toledo filed a complaint with the Bacoor Police Station against
Imelda Darvin. Upon further investigation, a certification was issued by the Philippine Overseas
Employment Administration (POEA) stating that Imelda Darvin is neither licensed nor authorized to
recruit workers for overseas employment.[5] Accused-appellant was then charged for estafa and illegal
recruitment by the Office of the Provincial Prosecutor of Cavite.
Accused-appellant, on the other hand, testified that she used to be connected with Dale Travel
Agency and that in 1992, or thereabouts, she was assisting individuals in securing passports, visa, and
airline tickets. She came to know Toledo through Florencio Jake Rivera, Jr. and Leonila Rivera, alleging
that Toledo sought her help to secure a passport, US visa and airline tickets to the States. She claims that
she did not promise any employment in the U.S. to Toledo. She, however, admits receiving the amount of
P150,000.00 from the latter on April 13, 1992 but contends that it was used for necessary expenses of an
intended trip to the United States of Toledo and her friend, Florencio Rivera[6] as follows:P45,000.00 for
plane fare for one person; P1,500.00 for passport, documentation and other incidental expenses for each
person; P20,000.00 for visa application cost for each person; and P17,000.00 for services. [7] After
receiving the money, she allegedly told Toledo that the papers will be released within 45 days. She
likewise testified that she was able to secure Toledos passport on April 20, 1992 and even set up a date
for an interview with the US embassy. Accused alleged that she was not engaged in illegal recruitment
but merely acted as a travel agent in assisting individuals to secure passports and visa.
In its judgment rendered on June 17, 1993, the Bacoor, Cavite RTC found accused-appellant guilty
of the crime of simple illegal recruitment but acquitted her of the crime of estafa. The dispositive portion
of the judgment reads as follows:

WHEREFORE, premises considered, accused Imelda Darvin is hereby found guilty beyond reasonable
doubt of the crime of Simple Illegal Recruitment for having committed the prohibited practice as defined
by paragraph (b) of Article 34 and punished by paragraph (c) of Article 39 of the Labor Code, as amended
by PD 2018.

Accused Imelda Darvin is hereby ordered to suffer the prison term of Four (4) years, as minimum, to
Eight (8) years, as maximum; and to pay the fine of P25,000.00.

Regarding her civil liability, she is hereby ordered to reimburse the private complainant the sum
of P150,000.00 and attorneys fees of P10,000.00.

She is hereby acquitted of the crime of Estafa.

SO ORDERED.[8]

On appeal, the Court of Appeals affirmed the decision of the trial court in toto, hence this petition.
Before this Court, accused-appellant assails the decision of the trial and appellate courts in
convicting her of the crime of simple illegal recruitment. She contends that based on the evidence
presented by the prosecution, her guilt was not proven beyond reasonable doubt.
We find the appeal impressed with merit.
Article 13 of the Labor Code, as amended, provides the definition of recruitment and placement as:

x x x; b) any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers,
and includes referrals, contract services, promising or advertising for employment. locally or abroad,
whether for profit or not: Provided , that any person or entity which, in any manner, offers or promises for
a fee employment to two or more persons shall be deemed engaged in recruitment and placement.

On the other hand, Article 38 of the Labor Code provides:

a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this
Code, to be undertaken by non-licensees or non-holders of authority shall be deemed illegal and
punishable under Article 39 of this Code. The Ministry of Labor and Employment or any law
enforcement officer may initiate complaints under this Article.

x x x x x x x x x.
 Applied to the present case, to uphold the conviction of accused-appellant, two elements need to be
shown: (1) the person charged with the crime must have undertaken recruitment activities; and (2) the
said person does not have a license or authority to do so.[9]
In this case, private respondent, Macaria Toledo alleged that she was offered a job in the United
States as nursing aide[10] by accused-appellant. In her direct examination, she testified as follows:
Atty Alejandro:
Q : How did you come to know the accused?
Witness : I was introduced by my two friends. One of whom is my best friend. That according to them,
this accused has connections and authorizations, that she can make people leave for abroad, sir.
Court : What connections?
Witness : That she has connections with the Embassy and with people whom she can approach
regarding work abroad, your Honor.
xxxxxxxxx
Q : When you came to meet for the first time in Imus, Cavite, what transpired in that meeting of
yours?
A : When I came to her house, the accused convinced me that by means of P150,000.00, I will be able
to leave immediately without any appearance to any embassy, non-appearance, Sir.
Q : When you mentioned non-appearance, as told to you by the accused, precisely, what do you
mean by that?
A : I was told by the accused that non-appearance, means without working personally for my papers
and through her efforts considering that she is capacitated as according to her I will be able to
leave the country, Sir.
xxxxxxxxx
Atty. Alejandro : What transpired after the accused told you all these things that you will be able to
secure all the documents without appearing to anybody or to any embassy and that you will be
able to work abroad?
Witness : She told me to get ready with my P150,000.00, that is if I want to leave immediately, Sir.
Atty. Alejandro : When you mentioned kaagad, how many days or week?
Witness : She said that if I will able to part with my P150,000.00. I will be able to leave in just one
week time, Sir.
x x x x x x x x x.[11]
The prosecution, as evidence, presented the certification issued by the POEA that accused-appellant
Imelda Darvin is not licensed to recruit workers abroad.
It is not disputed that accused-appellant does not have a license or authority to engage in recruitment
activities. The pivotal issue to be determined, therefore, is whether the accused-appellant indeed engaged
in recruitment activities, as defined under the Labor Code. Applying the rule laid down in the case
of People v. Goce,[12] to prove that accused-appellant was engaged in recruitment activities as to commit
the crime of illegal recruitment, it must be shown that the accused appellant gave private respondent the
distinct impression that she had the power or ability to send the private respondent abroad for work such
that the latter was convinced to part with her money in order to be so employed.
 In this case, we find no sufficient evidence to prove that accused-appellant offered a job to private
respondent. It is not clear that accused gave the impression that she was capable of providing the private
respondent work abroad. What is established, however, is that the private respondent gave accused-
appellant P150,000.00. The claim of the accused that the P150,000.00 was for payment of private
respondents air fare and US visa and other expenses cannot be ignored because the receipt for
the P150,000.00, which was presented by both parties during the trial of the case, stated that it was for Air
Fare and Visa to USA.[13] Had the amount been for something else in addition to air fare and visa
expenses, such as work placement abroad, the receipt should have so stated.
By themselves, procuring a passport, airline tickets and foreign visa for another individual, without
more, can hardly qualify as recruitment activities. Aside from the testimony of private respondent, there is
nothing to show that accused-appellant engaged in recruitment activities. We also note that the
prosecution did not present the testimonies of witnesses who could have corroborated the charge of illegal
recruitment, such asFlorencio Rivera, and Leonila Rivera, when it had the opportunity to do so. As it
stands, the claim of private respondent that accused-appellant promised her employment abroad is
uncorroborated. All these, taken collectively, cast reasonable doubt on the guilt of the accused.
This Court can hardly rely on the bare allegations of private respondent that she was offered by
accused-appellant employment abroad, nor on mere presumptions and conjectures, to convict the latter.
No sufficient evidence was shown to sustain the conviction, as the burden of proof lies with the
prosecution to establish that accused-appellant indeed engaged in recruitment activities, thus committing
the crime of illegal recruitment.
In criminal cases, the burden is on the prosecution to prove, beyond reasonable doubt, the essential
elements of the offense with which the accused is charged; and if the proof fails to establish any of the
essential elements necessary to constitute a crime, the defendant is entitled to an acquittal. Proof beyond
reasonable doubt does not mean such a degree of proof as, excluding the possibility of error, produces
absolute certainty. Moral certainty only is required, or that degree of proof which produces conviction in
an unprejudiced mind.[14]
At best, the evidence proffered by the prosecution only goes so far as to create a suspicion that
accused-appellant probably perpetrated the crime charged. But suspicion alone is insufficient, the required
quantum of evidence being proof beyond reasonable doubt. When the Peoples evidence fail to indubitably
prove the accuseds authorship of the crime of which he stands accused, then it is the Courts duty, and the
accuseds right, to proclaim his innocence. Acquittal, therefore, is in order.[15]
WHEREFORE, the appeal is hereby GRANTED and the decision of the Court of Appeals in CA-
G.R. CR No. 15624 dated January 31, 1996, is REVERSED and SET ASIDE. Accused-appellant Imelda
Darvin is hereby ACQUITTED on ground of reasonable doubt. Accordingly, let the accused be
immediately released from her place of confinement unless there is reason to detain her further for any
other legal or valid cause.No pronouncement as to costs.
SO ORDERED.
 FIRST DIVISION

[G.R. No. 129577-80. February 15, 2000]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. BULU CHOWDURY, accused-appellant.

DECISION

PUNO, J.:

In November 1995, Bulu Chowdury and Josephine Ong were charged before the Regional Trial Court of
Manila with the crime of illegal recruitment in large scale committed as follows:

"That sometime between the period from August 1994 to October 1994 in the City of
Manila, Philippines and within the jurisdiction of this Honorable Court, the above-named
accused, representing themselves to have the capacity to contract, enlist and transport
workers for employment abroad, conspiring, confederating and mutually helping one
another, did then and there willfully, unlawfully and feloniously recruit the herein
complainants: Estrella B. Calleja, Melvin C. Miranda and Aser S. Sasis, individually or
as a group for employment in Korea without first obtaining the required license and/or
authority from the Philippine Overseas Employment Administration."[1]

They were likewise charged with three counts of estafa committed against private complainants.[2] The
State Prosecutor, however, later dismissed the estafa charges against Chowdury[3] and filed an amended
information indicting only Ong for the offense.[4]

Chowdury was arraigned on April 16, 1996 while Ong remained at large. He pleaded "not guilty" to the
charge of illegal recruitment in large scale.[5]

Trial ensued.

The prosecution presented four witnesses: private complainants Aser Sasis, Estrella Calleja and Melvin
Miranda, and Labor Employment Officer Abbelyn Caguitla.

Sasis testified that he first met Chowdury in August 1994 when he applied with Craftrade Overseas
Developers (Craftrade) for employment as factory worker in South Korea. Chowdury, a consultant of
Craftrade, conducted the interview. During the interview, Chowdury informed him about the
requirements for employment. He told him to submit his passport, NBI clearance, passport size picture
and medical certificate. He also required him to undergo a seminar. He advised him that placement would
be on a first-come-first-serve basis and urged him to complete the requirements immediately. Sasis was
also charged a processing fee of P25,000.00. Sasis completed all the requirements in September 1994. He
also paid a total amount of P16,000.00 to Craftrade as processing fee. All payments were received by Ong
for which she issued three receipts.[6] Chowdury then processed his papers and convinced him to complete
his payment.[7]

Sasis further said that he went to the office of Craftrade three times to follow up his application but he
was always told to return some other day. In one of his visits to Craftrades office, he was informed that he
would no longer be deployed for employment abroad. This prompted him to withdraw his payment but he
could no longer find Chowdury. After two unsuccessful attempts to contact him, he decided to file with
the Philippine Overseas Employment Administration (POEA) a case for illegal recruitment against
Chowdury. Upon verification with the POEA, he learned that Craftrade's license had already expired and
has not been renewed and that Chowdury, in his personal capacity, was not a licensed recruiter.[8]

Calleja testified that in June 1994, she applied with Craftrade for employment as factory worker in South
Korea. She was interviewed by Chowdury. During the interview, he asked questions regarding her marital
status, her age and her province. Toward the end of the interview, Chowdury told her that she would be
working in a factory in Korea. He required her to submit her passport, NBI clearance, ID pictures,
medical certificate and birth certificate. He also obliged her to attend a seminar on overseas employment.
After she submitted all the documentary requirements, Chowdury required her to pay P20,000.00 as
placement fee. Calleja made the payment on August 11, 1994 to Ong for which she was issued a
receipt.[9] Chowdury assured her that she would be able to leave on the first week of September but it
proved to be an empty promise. Calleja was not able to leave despite several follow-ups. Thus, she went
to the POEA where she discovered that Craftrade's license had already expired. She tried to withdraw her
money from Craftrade to no avail. Calleja filed a complaint for illegal recruitment against Chowdury
upon advice of POEA's legal counsel.[10]

Miranda testified that in September 1994, his cousin accompanied him to the office of Craftrade in
Ermita, Manila and introduced him to Chowdury who presented himself as consultant and interviewer.
Chowdury required him to fill out a bio-data sheet before conducting the interview. Chowdury told
Miranda during the interview that he would send him to Korea for employment as factory worker. Then
he asked him to submit the following documents: passport, passport size picture, NBI clearance and
medical certificate. After he complied with the requirements, he was advised to wait for his visa and to
pay P25,000.00 as processing fee. He paid the amount of P25,000.00 to Ong who issued receipts
therefor.[11] Craftrade, however, failed to deploy him. Hence, Miranda filed a complaint with the POEA
against Chowdury for illegal recruitment.[12]

Labor Employment Officer Abbelyn Caguitla of the Licensing Branch of the POEA testified that she
prepared a certification on June 9, 1996 that Chowdury and his co-accused, Ong, were not, in their
personal capacities, licensed recruiters nor were they connected with any licensed agency. She
nonetheless stated that Craftrade was previously licensed to recruit workers for abroad which expired on
December 15, 1993. It applied for renewal of its license but was only granted a temporary license
effective December 16, 1993 until September 11, 1994. From September 11, 1994, the POEA granted
Craftrade another temporary authority to process the expiring visas of overseas workers who have already
been deployed. The POEA suspended Craftrade's temporary license on December 6, 1994.[13]

For his defense, Chowdury testified that he worked as interviewer at Craftrade from 1990 until 1994.
His primary duty was to interview job applicants for abroad. As a mere employee, he only followed the
instructions given by his superiors, Mr. Emmanuel Geslani, the agencys President and General Manager,
and Mr. Utkal Chowdury, the agency's Managing Director. Chowdury admitted that he interviewed
private complainants on different dates. Their office secretary handed him their bio-data and thereafter he
led them to his room where he conducted the interviews. During the interviews, he had with him a form
containing the qualifications for the job and he filled out this form based on the applicant's responses to
his questions. He then submitted them to Mr. Utkal Chowdury who in turn evaluated his findings. He
never received money from the applicants. He resigned from Craftrade on November 12, 1994.[14]

Another defense witness, Emelita Masangkay who worked at the Accreditation Branch of the POEA
presented a list of the accredited principals of Craftrade Overseas Developers[15] and a list of processed
workers of Craftrade Overseas Developers from 1988 to 1994.[16]
The trial court found Chowdury guilty beyond reasonable doubt of the crime of illegal recruitment in
large scale. It sentenced him to life imprisonment and to pay a fine of P100,000.00. It further ordered him
to pay Aser Sasis the amount of P16,000.00, Estrella Calleja, P20,000.00 and Melvin
Miranda, P25,000.00. The dispositive portion of the decision reads:

"WHEREFORE, in view of the foregoing considerations, the prosecution having proved

the guilt of the accused Bulu Chowdury beyond reasonable doubt of the crime of Illegal
Recruitment in large scale, he is hereby sentenced to suffer the penalty of life
imprisonment and a fine of P100,000.00 under Art. 39 (b) of the New Labor Code of the
Philippines. The accused is ordered to pay the complainants Aser Sasis the amount
of P16,000.00; Estrella Calleja the amount of P20,000.00; Melvin Miranda the amount
of P25,000.00."[17]

Chowdury appealed.

The elements of illegal recruitment in large scale are:

(1) The accused undertook any recruitment activity defined under Article 13 (b) or any
prohibited practice enumerated under Article 34 of the Labor Code;

(2) He did not have the license or authority to lawfully engage in the recruitment and
placement of workers; and

(3) He committed the same against three or more persons, individually or as a group.[18]

The last paragraph of Section 6 of Republic Act (RA) 8042[19] states who shall be held liable for the
offense, thus:

"The persons criminally liable for the above offenses are the principals, accomplices and
accessories. In case of juridical persons, the officers having control, management or
direction of their business shall be liable."

The Revised Penal Code which supplements the law on illegal recruitment[20] defines who are the
principals, accomplices and accessories. The principals are: (1) those who take a direct part in the
execution of the act; (2) those who directly force or induce others to commit it; and (3) those who
cooperate in the commission of the offense by another act without which it would not have been
accomplished.[21] The accomplices are those persons who may not be considered as principal as defined in
Section 17 of the Revised Penal Code but cooperate in the execution of the offense by previous or
simultaneous act.[22] The accessories are those who, having knowledge of the commission of the crime,
and without having participated therein, either as principals or accomplices, take part subsequent to its
commission in any of the following manner: (1) by profiting themselves or assisting the offenders to
profit by the effects of the crime; (2) by concealing or destroying the body of the crime, or the effects or
instruments thereof, in order to prevent its discovery; and (3) by harboring, concealing, or assisting in the
escape of the principal of the crime, provided the accessory acts with abuse of his public functions or
whenever the author of the crime is guilty of treason, parricide, murder, or an attempt at the life of the
chief executive, or is known to be habitually guilty of some other crime.[23]

Citing the second sentence of the last paragraph of Section 6 of RA 8042, accused-appellant contends that
he may not be held liable for the offense as he was merely an employee of Craftrade and he only
performed the tasks assigned to him by his superiors. He argues that the ones who should be held liable
for the offense are the officers having control, management and direction of the agency.

As stated in the first sentence of Section 6 of RA 8042, the persons who may be held liable for illegal
recruitment are the principals, accomplices and accessories. An employee of a company or corporation
engaged in illegal recruitment may be held liable as principal, together with his employer,[24] if it is shown
that he actively and consciously participated in illegal recruitment.[25] It has been held that the existence
of the corporate entity does not shield from prosecution the corporate agent who knowingly and
intentionally causes the corporation to commit a crime. The corporation obviously acts, and can act, only
by and through its human agents, and it is their conduct which the law must deter. The employee or agent
of a corporation engaged in unlawful business naturally aids and abets in the carrying on of such business
and will be prosecuted as principal if, with knowledge of the business, its purpose and effect, he
consciously contributes his efforts to its conduct and promotion, however slight his contribution may
be.[26] The law of agency, as applied in civil cases, has no application in criminal cases, and no man can
escape punishment when he participates in the commission of a crime upon the ground that he simply
acted as an agent of any party.[27] The culpability of the employee therefore hinges on his knowledge of
the offense and his active participation in its commission. Where it is shown that the employee was
merely acting under the direction of his superiors and was unaware that his acts constituted a crime, he
may not be held criminally liable for an act done for and in behalf of his employer.[28]

The fundamental issue in this case, therefore, is whether accused-appellant knowingly and intentionally
participated in the commission of the crime charged.

We find that he did not.

Evidence shows that accused-appellant interviewed private complainants in the months of June, August
and September in 1994 at Craftrade's office. At that time, he was employed as interviewer of Craftrade
which was then operating under a temporary authority given by the POEA pending renewal of its
license.[29] The temporary license included the authority to recruit workers.[30] He was convicted based on
the fact that he was not registered with the POEA as employee of Craftrade. Neither was he, in his
personal capacity, licensed to recruit overseas workers. Section 10 Rule II Book II of the Rules and
Regulation Governing Overseas Employment (1991) requires that every change, termination
or appointment of officers, representatives and personnel of licensed agencies be registered with the
POEA. Agents or representatives appointed by a licensed recruitment agency whose appointments are not
previously approved by the POEA are considered "non-licensee " or "non-holder of authority" and
therefore not authorized to engage in recruitment activity.[31]

Upon examination of the records, however, we find that the prosecution failed to prove that accused-
appellant was aware of Craftrade's failure to register his name with the POEA and that he actively
engaged in recruitment despite this knowledge. The obligation to register its personnel with the POEA
belongs to the officers of the agency.[32] A mere employee of the agency cannot be expected to know the
legal requirements for its operation. The evidence at hand shows that accused-appellant carried out his
duties as interviewer of Craftrade believing that the agency was duly licensed by the POEA and he, in
turn, was duly authorized by his agency to deal with the applicants in its behalf. Accused-appellant in fact
confined his actions to his job description. He merely interviewed the applicants and informed them of the
requirements for deployment but he never received money from them. Their payments were received by
the agency's cashier, Josephine Ong. Furthermore, he performed his tasks under the supervision of its
president and managing director. Hence, we hold that the prosecution failed to prove beyond reasonable
doubt accused-appellant's conscious and active participation in the commission of the crime of illegal
recruitment. His conviction, therefore, is without basis.
This is not to say that private complainants are left with no remedy for the wrong committed against
them. The Department of Justice may still file a complaint against the officers having control,
management or direction of the business of Craftrade Overseas Developers (Craftrade), so long as the
offense has not yet prescribed. Illegal recruitment is a crime of economic sabotage which need to be
curbed by the strong arm of the law. It is important, however, to stress that the government's action must
be directed to the real offenders, those who perpetrate the crime and benefit from it.

IN VIEW WHEREOF, the assailed decision of the Regional Trial Court is REVERSED and SET
ASIDE. Accused-appellant is hereby ACQUITTED. The Director of the Bureau of Corrections is ordered
to RELEASE accused-appellant unless he is being held for some other cause, and to REPORT to this
Court compliance with this order within ten (10) days from receipt of this decision. Let a copy of this
Decision be furnished the Secretary of the Department of Justice for his information and appropriate
action.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 103144 April 4, 2001

PHILSA INTERNATIONAL PLACEMENT and SERVICES CORPORATION, petitioner,

vs.
THE HON. SECRETARY OF LABOR AND EMPLOYMENT, VIVENCIO DE MESA,
RODRIGO MIKIN and CEDRIC LEYSON, respondents.

GONZAGA-REYES, J.:

This is a petition for certiorari from the Order dated November 25, 1991 issued by public respondent
Secretary of Labor and Employment. The November 25, 1991 Order affirmed in toto the August 29, 1988
Order of the Philippine Overseas Employment Administration (hereinafter the "POEA") which found
petitioner liable for three (3) counts of illegal exaction, two (2) counts of contract substitution and one
count of withholding or unlawful deduction from salaries of workers in POEA Case No. (L) 85-05-0370.

Petitioner Philsa International Placement and Services Corporation (hereinafter referred to as "Philsa") is
a domestic corporation engaged in the recruitment of workers for overseas employment. Sometime in
January 1985, private respondents, who were recruited by petitioner for employment in Saudi Arabia,
were required to pay placement fees in the amount of P5,000.00 for private respondent Rodrigo L. Mikin
and P6,500.00 each for private respondents Vivencio A. de Mesa and Cedric P. Leyson.1

After the execution of their respective work contracts, private respondents left for Saudi Arabia on
January 29, 1985. They then began work for Al-Hejailan Consultants A/E, the foreign principal of
petitioner.

While in Saudi Arabia, private respondents were allegedly made to sign a second contract on February 4,
1985 which changed some of the provisions of their original contract resulting in the reduction of some of
their benefits and privileges.2 On April 1, 1985, their foreign employer allegedly forced them to sign a
third contract which increased their work hours from 48 hours to 60 hours a week without any
corresponding increase in their basic monthly salary. When they refused to sign this third contract, the
services of private respondents were terminated by Al-Hejailan and they were repatriated to the
Philippines.3

Upon their arrival in the Philippines, private respondents demanded from petitioner Philsa the return of
their placement fees and for the payment of their salaries for the unexpired portion of their contract. When
petitioner refused, they filed a case before the POEA against petitioner Philsa and its foreign principal,
Al-Hejailan., with the following causes of action:

1. Illegal dismissal;

2. Payment of salary differentials;

3. Illegal deduction/withholding of salaries;

 4. Illegal exactions/refund of placement fees; and

5. Contract substitution. 4

The case was docketed as POEA Case No. (L) 85-05 0370.

Under the rules of the POEA dated May 21, 1985, complaints involving employer-employee relations
arising out of or by virtue of any law or contract involving Filipino workers for overseas employment,
including money claims, are adjudicated by the Workers' Assistance and Adjudication Office (hereinafter
the "WAAO") thru the POEA Hearing Officers.5 On the other hand, complaints involving recruitment
violations warranting suspension or cancellation of the license of recruiting agencies are cognizable by
the POEA thru its Licensing and Recruitment Office (hereinafter the "LRO"). 6 In cases where a
complaint partakes of the nature of both an employer-employee relationship case and a recruitment
regulation case, the POEA Hearing Officer shall act as representative of both the WAAO and the LRO
and both cases shall be heard simultaneously. In such cases, the Hearing Officer shall submit two separate
recommendations for the two aspects of the case. 7

In the case at bench, the first two causes of action were in the nature of money claims arising from the
employer-employee relations and were properly cognizable by the WAAO. The last two causes of action
were in the nature of recruitment violations and may be investigated by the LRO. The third cause of
action, illegal deduction/withholding of salary, is both a money claim and a violation of recruitment
regulations and is thus under the investigatory jurisdiction of both the WAAO and the LRO.

Several hearings were conducted before the POEA Hearing Officer on the two aspects of private
respondents' complaint. During these hearings, private respondents supported their complaint with the
presentation of both documentary and testimonial evidence. When it was its turn to present its evidence,
petitioner failed to do so and consequently, private respondents filed a motion to decide the case on the
basis of the evidence on record. 8

On the aspects of the case involving money claims arising from the employer-employee relations and
illegal dismissal, the POEA rendered a decision dated August 31, 1988 9 , the dispositive portion of which
reads:

"CONFORMABLY TO THE FOREGOING, judgment is hereby rendered ordering respondent

PHILSA INTERNATIONAL PLACEMENT AND SERVICE CORPORATION to pay
complainants, jointly and severally with its principal Al-Hejailan, the following amounts, to wit:

1. TWO THOUSAND TWO HUNDRED TWENTY FIVE SAUDI RIYALS (SR2,225.00) to

each complainant, representing the refund of their unpaid separation pay;

2. ONE THOUSAND SAUDI RIYALS (SR1,000.00) for V.A. de Mesa alone, representing the
salary deduction from his March salary;

3. TWO THOUSAND SAUDI RIYALS (SR2,000.00) each for R.I. Mikin and C.A.P. Leyson
only, representing their differential pay for the months of February and March, 1985; and

4. Five percent (5%) of the total awards as and by way of attorney's fees.
 All payments of the abovestated awards shall be made in Philippine Currency equivalent to the
prevailing exchange rate according to the Central Bank at the time of payment.

All other claims of complainants as well as the counterclaims of respondent are dismissed for
lack of merit.

SO ORDERED." 10

Under the Rules and Regulations of the POEA, the decision of the POEA-Adjudication Office on matters
involving money claims arising from the employer-employee relationship of overseas Filipino workers
may be appealed to the National Labor Relations Commission (hereinafter the "NLRC)11 . Thus, as both
felt aggrieved by the said POEA Decision, petitioner and private respondents filed separate appeals from
the August 31, 1988 POEA Decision to the NLRC.

In a decision dated July 26, 1989 12 , the NLRC modified the appealed decision of the POEA
Adjudication Office by deleting the award of salary deductions and differentials. These awards to private
respondents were deleted by the NLRC considering that these were not raised in the complaint filed by
private respondents. The NLRC likewise stated that there was nothing in the text of the decision which
would justify the award.

Private respondents filed a Motion for Reconsideration but the same was denied by the NLRC in a
Resolution dated October 25; 1989.

Private respondents then elevated the July 26, 1989 decision of the NLRC to the Supreme Court in a
petition for review for certiorari where it was docketed as G.R. No. 89089. However, in a Resolution
dated October 25, 1989, the petition was dismissed outright for "insufficiency in form and substance,
having failed to comply with the Rules of Court and Circular No. 1-88 requiring submission of a certified
true copy of the questioned resolution dated August 23, 1989." 13

Almost simultaneous with the promulgation of the August 31, 1988 decision of the POEA on private
respondents' money claims, the POEA issued a separate Order dated August 29, 1988 14 resolving the
recruitment violations aspect of private respondents' complaint. In this Order, the POEA found petitioner
guilty of illegal exaction, contract substitution, and unlawful deduction. The dispositive portion of this
August 29, 1988 POEA Order reads:

"WHEREFORE, premises considered, this Office finds herein respondent PHILSA International
Placement and Services Corporation liable for three (3) counts of illegal exaction, two (2) counts
of contract substitution and one count of withholding or unlawful deduction from salaries of
workers.

Accordingly, respondent is hereby ordered to refund the placement fees in the amount of
P2,500.00 to Rodrigo L. Mikin, P4,000.00, each, to Vivencio A. de Mesa and Cedric A.P. Leyson
plus restitution of the salaries withheld in the amount of SR1,000.00 to Vivencio A. de Mesa.

Moreover, respondent's license is hereby suspended for eight (8) months to take effect
immediately and to remain as such until full refund and restitution of the above-stated amounts
have been effected or in lieu thereof, it is fined the amount of SIXTY THOUSAND (P60,000.00)
PESOS plus restitution.

SO ORDERED."
In line with this August 29, 1988 Order, petitioner deposited the check equivalent to the claims of private
respondents and paid the corresponding fine under protest. From the said Order, petitioner filed a Motion
for Reconsideration which was subsequently denied in an Order dated October 10, 1989.

Under the POEA Rules and Regulations, the decision of the POEA thru the LRO suspending or canceling
a license or authority to act as a recruitment agency may be appealed to the Ministry (now Department) of
Labor and Employment. 15 Accordingly, after the denial of its motion for reconsideration, petitioner
appealed the August 21, 1988 Order to the Secretary of Labor and Employment. However, in an Order
dated September 13, 1991,16public respondent Secretary of Labor and Employment affirmed in toto the
assailed Order. Petitioner filed a Motion for Reconsideration but this was likewise denied in an Order
dated November 25, 1991.

Hence, the instant Petition for Certiorari where petitioner raises the following grounds for the reversal of
the questioned Orders:

THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN EXCESS OF JURISDICTION

OR WITH GRAVE ABUSE OF DISCRETION IN HOLDING PETITIONER GUILTY OF
ILLEGAL EXACTIONS. THE FINDING IS NOT SUPPORTED BY EVIDENCE AND IN
ANY EVENT, THE LAW ON WHICH THE CONVICTION IS BASED IS VOID.

II

THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN EXCESS OF JURISDICTION

OR WITH GRAVE ABUSE OF DISCRETION IN PENALIZING PETITIONER WITH
CONTRACT SUBSTITUTION. IN THE PREMISES, THE CONTRACT SUBSTITUTION IS
VALID AS IT IMPROVED THE TERMS AND CONDITIONS OF PRIVATE
RESPONDENTS' EMPLOYMENT.

III.

THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN EXCESS OF JURISDICTION,

OR WITH GRAVE ABUSE OF DISCRETION IN HOLDING PETITIONER LIABLE FOR
ILLEGAL DEDUCTIONS/WITHHOLDING OF SALARIES FOR THE SUPREME COURT
ITSELF HAS ALREADY ABSOLVED PETITIONER FROM THIS CHARGE.

With respect to the first ground, petitioner would want us to overturn the findings of the POEA,
subsequently affirmed by the Secretary of the Department of Labor and Employment, that it is guilty of
illegal exaction committed by collecting placement fees in excess of the amounts allowed by law. This
issue, however, is a question of fact which cannot be raised in a petition for certiorari under Rule 65. 17 As
we have previously held:

"It should be noted, in the first place, that the instant petition is a special civil action for certiorari
under Rule 65 of the Revised Rules of Court. An extraordinary remedy, its use is available only
and restrictively in truly exceptional cases wherein the action of an inferior court, board or officer
performing judicial or quasi-judicial acts is challenged for being wholly void on grounds of
jurisdiction. The sole office of the writ of certiorari is the correction of errors of jurisdiction
including the commission of grave abuse of discretion amounting to lack or excess of jurisdiction.
 It does not include correction of public respondent NLRC's evaluation of the evidence and factual
findings based thereon, which are generally accorded not only great respect but even finality." 18

The question of whether or not petitioner charged private respondents placement fees in excess of that
allowed by law is clearly a question of fact which is for public respondent POEA, as a trier of facts, to
determine. As stated above, the settled rule is that the factual findings of quasi-judicial agencies like the
POEA, which have acquired expertise because their jurisdiction is confined to specific matters, are
generally accorded not only respect, but at times even finality if such findings are supported by
substantial evidence. 19

On this point, we have carefully examined the records of the case and it is clear that the ruling of public
respondent POEA that petitioner is guilty of illegal exaction is supported by substantial evidence. Aside
from the testimonial evidence offered by private respondents, they also presented documentary evidence
consisting of receipts issued by a duly authorized representative of petitioner which show the payment of
amounts in excess of those allowed by the POEA. In contrast, petitioner did not present any evidence
whatsoever to rebut the claims of private respondents despite the many opportunities for them to do so.

Petitioner insists, however, that it cannot be held liable for illegal exaction as POEA Memorandum
Circular No. 11, Series of 1983, which enumerated the allowable fees which may be collected from
applicants, is void for lack of publication.

There is merit in the argument.

In Taada vs. Tuvera 20 , the Court held, as follows:

"We hold therefore that all statutes, including those of local application and private laws, shall be
published as a condition for their effectivity, which shall begin fifteen days after publication
unless a different effectivity date is fixed by the legislature.

Covered by this rule are presidential decrees and executive orders promulgated by the President
in the exercise of legislative powers whenever the same are validly delegated by the legislature
or, at present, directly conferred by the Constitution: Administrative rules and regulations must
also be published if their purpose is to enforce or implement existing law pursuant to a valid
delegation.

Interpretative regulations and those merely internal in nature, that is, regulating only the
personnel of the administrative agency and the public, need not be published. Neither is
publication required of the so-called letter of instructions issued by the administrative superiors
concerning the rules or guidelines to be followed by their subordinates in the performance of their
duties."

Applying this doctrine, we have previously declared as having no force and effect the following
administrative issuances: a) Rules and Regulations issued by the Joint Ministry of Health-Ministry of
Labor and Employment Accreditation Committee regarding the accreditation of hospitals, medical clinics
and laboratories; 21 b) Letter of Instruction No. 416 ordering the suspension of payments due and payable
by distressed copper mining companies to the national government; 22 c) Memorandum Circulars issued
by the POEA regulating the recruitment of domestic helpers to Hong Kong; 23 d) Administrative Order
No. SOCPEC 89-08-01 issued by the Philippine International Trading Corporation regulating applications
for importation from the People's Republic of China;24and e) Corporate Compensation Circular No. 10
issued by the Department of Budget and Management discontinuing the payment of other allowances and
fringe benefits to government officials and employees. 25 In all these cited cases, the administrative
issuances questioned therein were uniformly struck down as they were not published or filed with the
National Administrative Register as required by the Administrative Code of 1987. 26

POEA Memorandum Circular No. 2, Series of 1983 must likewise be declared ineffective as the same
was never published or filed with the National Administrative Register.

POEA Memorandum Order No. 2, Series of 1983 provides for the applicable schedule of placement and
documentation fees for private employment agencies or authority holders. Under the said Order, the
maximum amount which may be collected from prospective Filipino overseas workers is P2,500.00. The
said circular was apparently issued in compliance with the provisions of Article 32 of the Labor Code
which provides, as follows:

"ARTICLE 32. Fees to be paid by workers. Any person applying with a private fee-charging
employment agency for employment assistance shall not be charged any fee until he has obtained
employment through its efforts or has actually commenced employment. Such fee shall be always
covered with the approved receipt clearly showing the amount paid. The Secretary of Labor shall
promulgate a schedule of allowable fees." (italic supplied)

It is thus clear that the administrative circular under consideration is one of those issuances which should
be published for its effectivity, since its purpose is to enforce and implement an existing law pursuant to a
valid delegation. 27 Considering that POEA Administrative Circular No. 2, Series of 1983 has not as yet
been published or filed with the National Administrative Register, the same is ineffective and may not be
enforced.

The Office of the Solicitor General argues however that the imposition of administrative sanctions on
petitioner was based not on the questioned administrative circular but on Article 32 and Article 34
(a) 28 of the Labor Code.

The argument is not meritorious. The said articles of the Labor Code were never cited, much less
discussed, in the body of the questioned Orders of the POEA and Secretary of Labor and Employment. In
fact, the said Orders were consistent in mentioning that petitioner's violation of Administrative Circular
No. 2, Series of 1983 was the basis for the imposition of administrative sanctions against petitioner.
Furthermore, even assuming that petitioner was held liable under the said provisions of the Labor Code,
Articles 32 and 34 (a) of the Labor Code presupposes the promulgation of a valid schedule of fees by the
Department of Labor and Employment. Considering that, as, previously discussed, Administrative
Circular No. 2, Series of 1983 embodying such a schedule of fees never took effect, there is thus no basis
for the imposition of the administrative sanctions against petitioner. Moreover, under Book VI, Chapter
II, Section 3 of the Administrative Code of 1987, "(r)ules in force on the date of the effectivity of this
Code which are not filed within three (3) months from that date shall not thereafter be the basis of any
sanction against any party or persons." Considering that POEA Administrative Circular No. 2 was never
filed with the National Administrative Register, the same cannot be used as basis for the imposition of
administrative sanctions against petitioner.

The Office of the Solicitor General likewise argues that the questioned administrative circular is not
among those requiring publication contemplated by Taada vs. Tuvera as it is addressed only to a specific
group of persons and not to the general public.

Again, there is no merit in this argument.

The fact that the said circular is addressed only to a specified group, namely private employment agencies
or authority holders, does not take it away from the ambit of our ruling in Taada vs. Tuvera. In the case
of Phil. Association of Service Exporters vs. Torres,29 the administrative circulars questioned therein were
addressed to an even smaller group, namely Philippine and Hong Kong agencies engaged in the
recruitment of workers for Hong Kong, and still the Court ruled therein that, for lack of proper
publication, the said circulars may not be enforced or implemented.

Our pronouncement in Taada vs. Tuvera is clear and categorical. Administrative rules and regulations
must be published if their purpose is to enforce or implement existing law pursuant to a valid delegation.,
The only exceptions are interpretative regulations, those merely internal in nature, or those so-called
letters of instructions issued by administrative superiors concerning the rules and guidelines to be
followed by their subordinates in the performance of their duties. Administrative Circular No. 2, Series of
1983 has not been shown to fall under any of these exceptions.

In this regard, the Solicitor General's reliance on the case of Yaokasin vs. Commissioner of Customs 30 is
misplaced. In the said case, the validity of certain Customs Memorandum Orders were upheld despite
their lack of publication as they were addressed to a particular class of persons, the customs collectors,
who were also the subordinates of the Commissioner of the Bureau of Customs. As such, the said
Memorandum Orders clearly fall under one of the exceptions to the publication requirement, namely
those dealing with instructions from an administrative superior to a subordinate regarding the
performance of their duties, a circumstance which does not obtain in the case at bench.

With respect to the second ground, petitioner would want us to review the findings of fact of the POEA
regarding the two counts of alleged contract substitution. Again, this is a question of fact which may not
be disturbed if the same is supported by substantial evidence. A reading of the August 29, 1988 Order of
the POEA shows that, indeed, the ruling that petitioner is guilty of two (2) counts of prohibited contract
substitution is supported by substantial evidence. Thus:

"2. As admitted by respondent, there was definitely a contract of substitution in the first count.
The first contract was duly approved by the Administration and, therefore, the parties are bound
by the terms and condition thereof until its expiration. The mere intention of respondents to
increase the number of hours of work, even if there was a corresponding increase in wage is clear
violation of the contract as approved by the Administration, and notwithstanding the same, the
amendment is evidently contrary to law, morals, good customs and public policy and hence, must
be shunned (Art. 1306, Civil Code of the Philippines, Book III, Title I, Chapter 1, Article 83,
Labor Code of the Philippines, as amended). Moreover, it would appear that the proposed salary
increase corresponding to the increase in number of work bonus may just have been a ploy as
complainant were (sic) thereafter not paid at the increased rate.

As to contract substitution in the second part, a third contract was emphatically intended by
respondent to be signed by complainants which, however, was not consummated due to the
adamant refusal of complainants to sign thereon. Mere intention of the respondent to commit
contract substitution for a second time should not be left unpunished. It is the duty of this Office
to repress such acts by teaching agencies a lesson to avoid repetition of the same violation." 31

With respect to the third ground, petitioner argues that the public respondent committed grave abuse of
discretion in holding petitioner liable for illegal deductions/withholding of salaries considering that the
Supreme Court itself has already absolved petitioner from this charge. Petitioner premises its argument on
the fact that the July 26, 1989 Decision of the NLRC absolving it from private respondent de Mesa's
claim for salary deduction has already attained finality by reason of the dismissal of private respondents'
petition for certiorari of the said NLRC decision by the Supreme Court.

Petitioner is correct in stating that the July 26, 1989 Decision of the NLRC has attained finality by reason
of the dismissal of the petition for certiorari assailing the same. However, the said NLRC Decision dealt
only with the money claims of private respondents arising from employer-employee relations and illegal
dismissal and as such, it is only for the payment of the said money claims that petitioner is absolved. The
administrative sanctions, which are distinct and separate from the money claims of private respondents,
may still be properly imposed by the POEA. In fact, in the August 31, 1988 Decision of the POEA
dealing with the money claims of private respondents, the POEA Adjudication Office precisely declared
that "respondent's liability for said money claims is without prejudice to and independent of its liabilities
for the recruitment violations aspect of the case which is the subject of a separate Order." 32

The NLRC Decision absolving petitioner from paying private respondent de Mesa's claim for salary
deduction based its ruling on a finding that the said money claim was not raised in the complaint. 33 While
there may be questions regarding such finding of the NLRC, the finality of the said NLRC Decision
prevents us from modifying or reviewing the same. But the fact that the claim for salary deduction was
not raised by private respondents in their complaint will not bar the POEA from holding petitioner liable
for illegal deduction or withholding of salaries as a ground for the suspension or cancellation of
petitioner's license.

Under the POEA Rules and Regulations, the POEA, on its own initiative, may conduct the necessary
proceeding for the suspension or cancellation of the license of any private placement agency on any of the
grounds mentioned therein. 34 As such, even without a written complaint from an aggrieved party, the
POEA can initiate proceedings against an erring private placement agency and, if the result of its
investigation so warrants, impose the corresponding administrative sanction thereof. Moreover, the
POEA, in an investigation of an employer-employee relationship case, may still hold a respondent liable
for administrative sanctions if, in the course of its investigation, violations of recruitment regulations are
uncovered. 35 It is thus clear that even if recruitment violations were not included in a complaint for
money claims initiated by a private complainant, the POEA, under its rules, may still take cognizance of
the same and impose administrative sanctions if the evidence so warrants.

As such, the fact that petitioner has been absolved by final judgment for the payment of the money claim
to private respondent de Mesa does not mean that it is likewise absolved from the administrative sanctions
which may be imposed as a result of the unlawful deduction or withholding of private respondents' salary.
The POEA thus committed no grave abuse of discretion in finding petitioner administratively liable of
one count of unlawful deduction/withholding of salary.

To summarize, petitioner should be absolved from the three (3) counts of illegal exaction as POEA
Administrative Circular No. 2, Series of 1983 could not be the basis of administrative sanctions against
petitioner for lack of publication. However, we affirm the ruling of the POEA and the Secretary of Labor
and Employment that petitioner should be held administratively liable for two (2) counts of contract
substitution and one (1) count of withholding or unlawful deduction of salary.

Under the applicable schedule of penalties imposed by the POEA, the penalty for each count of contract
substitution is suspension of license for two (2) months or a fine of P10,000.00 while the penalty for
withholding or unlawful deduction of salaries is suspension of license for two (2) months or fine equal to
the salary withheld but not less than P10,000.00 plus restitution of the amount in both
instances.36 Applying the said schedule on the instant case, the license of petitioner should be suspended
for six (6) months or, in lieu thereof, it should be ordered to pay fine in the amount of P30,000.00.
Petitioner should likewise pay the amount of SR1,000.00 to private respondent Vivencio A. de Mesa as
restitution for the amount withheld from his salary.

WHEREFORE, premises considered, the September 13, 1991 and November 25, 1991 Orders of public
respondent Secretary of Labor and Employment are hereby MODIFIED. As modified, the license of
private respondent Philsa International Placement and Services Corporation is hereby suspended for six
(6) months or, in lieu thereof, it is hereby ordered to pay the amount of P30,000.00 as fine. Petitioner is
likewise ordered to pay the amount of SR1,000.00 to private respondent Vivencio A. de Mesa. All other
monetary awards are deleted.

SO ORDERED.
EN BANC

HON. PATRICIA A. STO. TOMAS, G.R. No. 152642

ROSALINDA BALDOZ and

LUCITA LAZO,

Petitioners, Present:

SERENO, C.J.,

CARPIO,

VELASCO, JR.,

LEONARDO-DE CASTRO,

BRION,

- versus - PERALTA,

BERSAMIN,

DEL CASTILLO,

ABAD,

VILLARAMA, JR.,

PEREZ,

MENDOZA,

REYES, and

PERLAS-BERNABE, JJ.

REY SALAC, WILLIE D. ESPIRITU,

MARIO MONTENEGRO, DODGIE

BELONIO, LOLIT SALINEL and

BUDDY BONNEVIE,
Respondents.

x ------------------------------------------------- x

HON. PATRICIA A. STO. TOMAS, G.R. No. 152710

in her capacity as Secretary of

Department of Labor and Employment

(DOLE), HON. ROSALINDA D.

BALDOZ, in her capacity as

Administrator, Philippine Overseas

Employment Administration (POEA),

and the PHILIPPINE OVERSEAS

EMPLOYMENT ADMINISTRATION

GOVERNING BOARD,

Petitioners,

Decision G.R. Nos. 152642, 152710, 167590,

182978-79 & 184298-99

- versus -

HON. JOSE G. PANEDA, in his capacity as

the Presiding Judge of Branch 220, Quezon

City, ASIAN RECRUITMENT COUNCIL

PHILIPPINE CHAPTER, INC.

(ARCOPHIL), for itself and in behalf of its

members: WORLDCARE PHILIPPINES

SERVIZO INTERNATIONALE, INC.,

STEADFAST INTERNATIONAL

RECRUITMENT CORP., VERDANT

MANPOWER MOBILIZATION CORP.,

BRENT OVERSEAS PERSONNEL, INC.,

ARL MANPOWER SERVICES, INC.,

DAHLZEN INTERNATIONAL SERVICES,

INC., INTERWORLD PLACEMENT

CENTER, INC., LAKAS TAO CONTRACT

SERVICES LTD. CO., SSC MULTISERVICES,

DMJ INTERNATIONAL, and

MIP INTERNATIONAL MANPOWER

SERVICES, represented by its proprietress,

MARCELINA I. PAGSIBIGAN,

Respondents.

x -------------------------------------------------- x

REPUBLIC OF THE PHILIPPINES, G.R. No. 167590

represented by the HONORABLE

EXECUTIVE SECRETARY, the

HONORABLE SECRETARY OF

LABOR AND EMPLOYMENT (DOLE),

the PHILIPPINE OVERSEAS

EMPLOYMENT ADMINISTRATION

(POEA), the OVERSEAS WORKERS

WELFARE ADMINISTRATION
(OWWA), the LABOR ARBITERS OF

THE NATIONAL LABOR RELATIONS

COMMISSION (NLRC), the

HONORABLE SECRETARY OF

JUSTICE, the HONORABLE

SECRETARY OF FOREIGN AFFAIRS

and the COMMISSION ON AUDIT

(COA),

Petitioners,

- versus -

Decision 3

PHILIPPINE ASSOCIATION OF

SERVICE EXPORTERS, INC. (PASEI),

Respondent.

X ------------------------------------------------- X

BECMEN SERVICE EXPORTER

AND PROMOTION, INC.,

Petitioner,

-versusSPOUSES

SIMPLICIO AND MILA

CUARESMA (for and in behalf of

daughter, Jasmin G. Cuaresma),

WHITE FALCON SERVICES, INC.,

and JAIME ORTIZ (President of

White Falcon Services, Inc.),

Respondents.

X ---------------------------------~--------------- X

SPOUSES SIMPLICIO AND MILA

CUARESMA (for and in behalf of

deceased daughter, Jasmin G. Cuaresma),

Petitioners,

-versus- ..

WHITE FALCON SERVICES, INC.

and BECMEN SERVICES EXPORTER

AND PROMOTION, INC.,

Respondents.

G.R. Nos. 152642, 152710, 167590,

182978-79 & 184298-99

'

G.R. Nos. 182978-79 ..

G.R. Nos. 184298-99

Promulgated:

N~VEMBER 13, 2012 ~~ X ----~---~------------------------------------------------------------------------------- X

DECISION

ABAD, J.:

. ' "'
These consolidated cases pertain to the constitutionality of certain

provisions of Republic Act 8042, otherwise known as the Migrant Workers

and Overseas Filipinos Act of 1995.

Decision G.R. Nos. 152642, 152710, 167590,

182978-79 & 184298-99

PHILIPPINE ASSOCIATION OF

SERVICE EXPORTERS, INC. (PASEI),

Respondent.

x ------------------------------------------------- x

BECMEN SERVICE EXPORTER G.R. Nos. 182978-79

AND PROMOTION, INC.,

Petitioner,

- versus -

SPOUSES SIMPLICIO AND MILA

CUARESMA (for and in behalf of

daughter, Jasmin G. Cuaresma),

WHITE FALCON SERVICES, INC.,

and JAIME ORTIZ (President of

White Falcon Services, Inc.),

Respondents.

x ------------------------------------------------- x

SPOUSES SIMPLICIO AND MILA G.R. Nos. 184298-99

CUARESMA (for and in behalf of

deceased daughter, Jasmin G. Cuaresma),

Petitioners,

- versus -

WHITE FALCON SERVICES, INC. Promulgated:

and BECMEN SERVICES EXPORTER

AND PROMOTION, INC.,

Respondents. _______________

x ---------------------------------------------------------------------------------------- x

DECISION

ABAD, J.:

These consolidated cases pertain to the constitutionality of certain

provisions of Republic Act 8042, otherwise known as the Migrant Workers

and Overseas Filipinos Act of 1995.

Decision G.R. Nos. 152642, 152710, 167590,

182978-79 & 184298-99

The Facts and the Case

On June 7, 1995 Congress enacted Republic Act (R.A.) 8042 or the

Migrant Workers and Overseas Filipinos Act of 1995 that, for among other

purposes, sets the Governments policies on overseas employment and

establishes a higher standard of protection and promotion of the welfare of

migrant workers, their families, and overseas Filipinos in distress.

G.R. 152642 and G.R. 152710

(Constitutionality of Sections 29 and 30, R.A. 8042)

Sections 29 and 30 of the Act1

commanded the Department of Labor

and Employment (DOLE) to begin deregulating within one year of its

passage the business of handling the recruitment and migration of overseas

Filipino workers and phase out within five years the regulatory functions of

the Philippine Overseas Employment Administration (POEA).

On January 8, 2002 respondents Rey Salac, Willie D. Espiritu, Mario

Montenegro, Dodgie Belonio, Lolit Salinel, and Buddy Bonnevie (Salac, et

al.) filed a petition for certiorari, prohibition and mandamus with

application for temporary restraining order (TRO) and preliminary

injunction against petitioners, the DOLE Secretary, the POEA

Administrator, and the Technical Education and Skills Development

Authority (TESDA) Secretary-General before the Regional Trial Court

(RTC) of Quezon City, Branch 96.2

SEC. 29. COMPREHENSIVE DEREGULATION PLAN ON RECRUITMENT ACTIVITIES.

Pursuant to a progressive policy of deregulation whereby the migration of workers becomes strictly a

matter between the worker and his foreign employer, the DOLE within one (1) year from the effectivity
of

this Act, is hereby mandated to formulate a five-year comprehensive deregulation plan on recruitment

activities taking into account labor market trends, economic conditions of the country and emerging
circumstances which may affect the welfare of migrant workers.

SEC. 30. GRADUAL PHASE-OUT OF REGULATORY FUNCTIONS. Within a period of five (5)

years from the effectivity of this Act, the DOLE shall phase-out the regulatory functions of the POEA

pursuant to the objectives of deregulation.

Docketed as Civil Case Q-02-45907.

Decision G.R. Nos. 152642, 152710, 167590,

182978-79 & 184298-99

Salac, et al. sought to: 1) nullify DOLE Department Order 10 (DOLE

DO 10) and POEA Memorandum Circular 15 (POEA MC 15); 2) prohibit

the DOLE, POEA, and TESDA from implementing the same and from

further issuing rules and regulations that would regulate the recruitment and

placement of overseas Filipino workers (OFWs); and 3) also enjoin them to

comply with the policy of deregulation mandated under Sections 29 and 30

of Republic Act 8042.

On March 20, 2002 the Quezon City RTC granted Salac, et al.s

petition and ordered the government agencies mentioned to deregulate the

recruitment and placement of OFWs.3

The RTC also annulled DOLE DO

10, POEA MC 15, and all other orders, circulars and issuances that are

inconsistent with the policy of deregulation under R.A. 8042.

Prompted by the RTCs above actions, the government officials

concerned filed the present petition in G.R. 152642 seeking to annul the
RTCs decision and have the same enjoined pending action on the petition.

On April 17, 2002 the Philippine Association of Service Exporters,

Inc. intervened in the case before the Court, claiming that the RTC March

20, 2002 Decision gravely affected them since it paralyzed the deployment

abroad of OFWs and performing artists. The Confederated Association of

Licensed Entertainment Agencies, Incorporated (CALEA) intervened for the

same purpose.

On May 23, 2002 the Court5

issued a TRO in the case, enjoining the

Quezon City RTC, Branch 96, from enforcing its decision.

In a parallel case, on February 12, 2002 respondents Asian

Recruitment Council Philippine Chapter, Inc. and others (Arcophil, et al.)

Rollo (G.R. 152642), pp. 70-82. 4

Id. at 210-297.

Id. at 845-849.

Decision G.R. Nos. 152642, 152710, 167590,

182978-79 & 184298-99

filed a petition for certiorari and prohibition with application for TRO and
preliminary injunction against the DOLE Secretary, the POEA

Administrator, and the TESDA Director-General,6

before the RTC of

Quezon City, Branch 220, to enjoin the latter from implementing the 2002

Rules and Regulations Governing the Recruitment and Employment of

Overseas Workers and to cease and desist from issuing other orders,

circulars, and policies that tend to regulate the recruitment and placement of

OFWs in violation of the policy of deregulation provided in Sections 29 and

30 of R.A. 8042.

On March 12, 2002 the Quezon City RTC rendered an Order, granting

the petition and enjoining the government agencies involved from exercising

regulatory functions over the recruitment and placement of OFWs. This

prompted the DOLE Secretary, the POEA Administrator, and the TESDA

Director-General to file the present action in G.R. 152710. As in G.R.

152642, the Court issued on May 23, 2002 a TRO enjoining the Quezon City

RTC, Branch 220 from enforcing its decision.

On December 4, 2008, however, the Republic informed7

the Court

that on April 10, 2007 former President Gloria Macapagal-Arroyo signed

into law R.A. 94228

which expressly repealed Sections 29 and 30 of R.A.

8042 and adopted the policy of close government regulation of the

recruitment and deployment of OFWs. R.A. 9422 pertinently provides:

xxxx
SEC. 1. Section 23, paragraph (b.1) of Republic Act No. 8042,

otherwise known as the Migrant Workers and Overseas Filipinos Act of

1995 is hereby amended to read as follows:

(b.1) Philippine Overseas Employment Administration The

Administration shall regulate private sector participation in the recruitment

Filed on February 12, 2002, docketed as Civil Case Q-02-46127 before RTC Branch 220 of Quezon City.

Manifestation and Motion, rollo (G.R. 152642), pp. 1338-1359. 8

An Act to Strengthen the Regulatory Functions of the Philippine Overseas Employment Administration

(POEA), Amending for this Purpose Republic Act 8042, otherwise known as the Migrant Workers and

Overseas Filipinos Act of 1995.

Decision G.R. Nos. 152642, 152710, 167590,

182978-79 & 184298-99

and overseas placement of workers by setting up a licensing and

registration system. It shall also formulate and implement, in coordination

with appropriate entities concerned, when necessary, a system for

promoting and monitoring the overseas employment of Filipino workers

taking into consideration their welfare and the domestic manpower

requirements.

In addition to its powers and functions, the administration shall

inform migrant workers not only of their rights as workers but also of their
rights as human beings, instruct and guide the workers how to assert their

rights and provide the available mechanism to redress violation of their

rights.

In the recruitment and placement of workers to service the

requirements for trained and competent Filipino workers of foreign

governments and their instrumentalities, and such other employers as

public interests may require, the administration shall deploy only to

countries where the Philippines has concluded bilateral labor agreements

or arrangements: Provided, That such countries shall guarantee to protect

the rights of Filipino migrant workers; and: Provided, further, That such

countries shall observe and/or comply with the international laws and

standards for migrant workers.

SEC. 2. Section 29 of the same law is hereby repealed.

SEC. 3. Section 30 of the same law is also hereby repealed.

xxxx

On August 20, 2009 respondents Salac, et al. told the Court in G.R.

152642 that they agree9

with the Republics view that the repeal of Sections

29 and 30 of R.A. 8042 renders the issues they raised by their action moot

and academic. The Court has no reason to disagree. Consequently, the two

cases, G.R. 152642 and 152710, should be dismissed for being moot and

academic.

G.R. 167590
(Constitutionality of Sections 6, 7, and 9 of R.A. 8042)

On August 21, 1995 respondent Philippine Association of Service

Exporters, Inc. (PASEI) filed a petition for declaratory relief and prohibition

with prayer for issuance of TRO and writ of preliminary injunction before

the RTC of Manila, seeking to annul Sections 6, 7, and 9 of R.A. 8042 for

Reply, rollo (G.R. 152642), pp. 1392-1395.

Decision G.R. Nos. 152642, 152710, 167590,

182978-79 & 184298-99

being unconstitutional. (PASEI also sought to annul a portion of Section 10

but the Court will take up this point later together with a related case.)

Section 6 defines the crime of illegal recruitment and enumerates

the acts constituting the same. Section 7 provides the penalties for

prohibited acts. Thus:

SEC. 6. Definition. For purposes of this Act, illegal recruitment

shall mean any act of canvassing, enlisting, contracting, transporting,

utilizing, hiring, procuring workers and includes referring, contract

services, promising or advertising for employment abroad, whether for

profit or not, when undertaken by a non-license or non-holder of authority

contemplated under Article 13(f) of Presidential Decree No. 442, as

amended, otherwise known as the Labor Code of the Philippines:

Provided, That such non-license or non-holder, who, in any manner, offers

or promises for a fee employment abroad to two or more persons shall be

deemed so engaged. It shall likewise include the following acts, whether

committed by any person, whether a non-licensee, non-holder, licensee or

holder of authority:

xxxx

SEC. 7. Penalties.

(a) Any person found guilty of illegal recruitment shall suffer

the penalty of imprisonment of not less than six (6) years and one (1) day

but not more than twelve (12) years and a fine not less than two hundred

thousand pesos (P200,000.00) nor more than five hundred thousand pesos

(P500,000.00).

(b) The penalty of life imprisonment and a fine of not less than

five hundred thousand pesos (P500,000.00) nor more than one million

pesos (P1,000,000.00) shall be imposed if illegal recruitment constitutes

economic sabotage as defined herein.

Provided, however, That the maximum penalty shall be imposed if

the person illegally recruited is less than eighteen (18) years of age or

committed by a non-licensee or non-holder of authority.10

Finally, Section 9 of R.A. 8042 allowed the filing of criminal actions

arising from illegal recruitment before the RTC of the province or city

where the offense was committed or where the offended party actually

resides at the time of the commission of the offense.

10 Section 7 was subsequently amended to increase both the durations of imprisonment and the amounts
of

the fines.

Decision G.R. Nos. 152642, 152710, 167590,

182978-79 & 184298-99

The RTC of Manila declared Section 6 unconstitutional after hearing

on the ground that its definition of illegal recruitment is vague as it fails to

distinguish between licensed and non-licensed recruiters11 and for that

reason gives undue advantage to the non-licensed recruiters in violation of

the right to equal protection of those that operate with government licenses

or authorities.

But illegal recruitment as defined in Section 6 is clear and

unambiguous and, contrary to the RTCs finding, actually makes a

distinction between licensed and non-licensed recruiters. By its terms,

persons who engage in canvassing, enlisting, contracting, transporting,

utilizing, hiring, or procuring workers without the appropriate government

license or authority are guilty of illegal recruitment whether or not they

commit the wrongful acts enumerated in that section. On the other hand,

recruiters who engage in the canvassing, enlisting, etc. of OFWs, although

with the appropriate government license or authority, are guilty of illegal

recruitment only if they commit any of the wrongful acts enumerated in

Section 6.

The Manila RTC also declared Section 7 unconstitutional on the

ground that its sweeping application of the penalties failed to make any

distinction as to the seriousness of the act committed for the application of

the penalty imposed on such violation. As an example, said the trial court,

the mere failure to render a report under Section 6(h) or obstructing the

inspection by the Labor Department under Section 6(g) are penalized by

imprisonment for six years and one day and a minimum fine of P200,000.00

but which could unreasonably go even as high as life imprisonment if

committed by at least three persons.

11 A non-licensee or non-holder of authority means any person, corporation or entity which has not been

issued a valid license or authority to engage in recruitment and placement by the Secretary of Labor, or

whose license or authority has been suspended, revoked or cancelled by the POEA or the Secretary
(People

v. Engr. Diaz, 328 Phil. 794, 806 [1996]).

Decision G.R. Nos. 152642, 152710, 167590,

182978-79 & 184298-99

10

Apparently, the Manila RTC did not agree that the law can impose

such grave penalties upon what it believed were specific acts that were not

as condemnable as the others in the lists. But, in fixing uniform penalties for

each of the enumerated acts under Section 6, Congress was within its

prerogative to determine what individual acts are equally reprehensible,

consistent with the State policy of according full protection to labor, and

deserving of the same penalties. It is not within the power of the Court to

question the wisdom of this kind of choice. Notably, this legislative policy
has been further stressed in July 2010 with the enactment of R.A. 1002212

which increased even more the duration of the penalties of imprisonment

and the amounts of fine for the commission of the acts listed under

Section 7.

Obviously, in fixing such tough penalties, the law considered the

unsettling fact that OFWs must work outside the countrys borders and

beyond its immediate protection. The law must, therefore, make an effort to

somehow protect them from conscienceless individuals within its

jurisdiction who, fueled by greed, are willing to ship them out without clear

assurance that their contracted principals would treat such OFWs fairly and

humanely.

As the Court held in People v. Ventura,

13 the State under its police

power may prescribe such regulations as in its judgment will secure or tend

to secure the general welfare of the people, to protect them against the

consequence of ignorance and incapacity as well as of deception and fraud.

Police power is that inherent and plenary power of the State which enables

it to prohibit all things hurtful to the comfort, safety, and welfare of

society.14

12 An Act Amending Republic Act 8042, Otherwise Known as the Migrant Workers and Overseas
Filipinos

Act of 1995, as Amended, Further Improving the Standard of Protection and Promotion of the Welfare of
Migrant Workers, their Families and Overseas Filipinos in Distress, and For Other Purposes. 13 114 Phil.
162, 167 (1962).

14 Rubi v. Provincial Board of Mindoro, 39 Phil. 660, 708 (1919).

Decision G.R. Nos. 152642, 152710, 167590,

182978-79 & 184298-99

11

The Manila RTC also invalidated Section 9 of R.A. 8042 on the

ground that allowing the offended parties to file the criminal case in their

place of residence would negate the general rule on venue of criminal cases

which is the place where the crime or any of its essential elements were

committed. Venue, said the RTC, is jurisdictional in penal laws and,

allowing the filing of criminal actions at the place of residence of the

offended parties violates their right to due process. Section 9 provides:

SEC. 9. Venue. A criminal action arising from illegal recruitment

as defined herein shall be filed with the Regional Trial Court of the

province or city where the offense was committed or where the offended

party actually resides at the time of the commission of the offense:

Provided, That the court where the criminal action is first filed shall

acquire jurisdiction to the exclusion of other courts: Provided, however,

That the aforestated provisions shall also apply to those criminal actions

that have already been filed in court at the time of the effectivity of this

Act.

But there is nothing arbitrary or unconstitutional in Congress fixing an

alternative venue for violations of Section 6 of R.A. 8042 that differs from

the venue established by the Rules on Criminal Procedure. Indeed, Section

15(a), Rule 110 of the latter Rules allows exceptions provided by laws.

Thus:

SEC. 15. Place where action is to be instituted. (a) Subject to

existing laws, the criminal action shall be instituted and tried in the court

of the municipality or territory where the offense was committed or where

any of its essential ingredients occurred. (Emphasis supplied)

xxxx

Section 9 of R.A. 8042, as an exception to the rule on venue of

criminal actions is, consistent with that laws declared policy15 of providing

a criminal justice system that protects and serves the best interests of the

victims of illegal recruitment.

15 Par. d and e.

Decision G.R. Nos. 152642, 152710, 167590,

182978-79 & 184298-99

12

G.R. 167590, G.R. 182978-79,16 and G.R. 184298-9917

(Constitutionality of Section 10, last sentence of 2nd paragraph)

G.R. 182978-79 and G.R. 184298-99 are consolidated cases.

Respondent spouses Simplicio and Mila Cuaresma (the Cuaresmas) filed a

claim for death and insurance benefits and damages against petitioners

Becmen Service Exporter and Promotion, Inc. (Becmen) and White Falcon

Services, Inc. (White Falcon) for the death of their daughter Jasmin

Cuaresma while working as staff nurse in Riyadh, Saudi Arabia.

The Labor Arbiter (LA) dismissed the claim on the ground that the

Cuaresmas had already received insurance benefits arising from their

daughters death from the Overseas Workers Welfare Administration

(OWWA). The LA also gave due credence to the findings of the Saudi

Arabian authorities that Jasmin committed suicide.

On appeal, however, the National Labor Relations Commission

(NLRC) found Becmen and White Falcon jointly and severally liable for

Jasmins death and ordered them to pay the Cuaresmas the amount of

US$113,000.00 as actual damages. The NLRC relied on the Cabanatuan

City Health Offices autopsy finding that Jasmin died of criminal violence

and rape.

Becmen and White Falcon appealed the NLRC Decision to the Court

of Appeals (CA).18 On June 28, 2006 the CA held Becmen and White

Falcon jointly and severally liable with their Saudi Arabian employer for

actual damages, with Becmen having a right of reimbursement from White

Falcon. Becmen and White Falcon appealed the CA Decision to this Court.

16 Entitled Becmen Service Exporter and Promotion, Inc. v. Spouses Simplicio and Mila Cuaresma, for
and

in behalf of their daughter Jasmin G. Cuaresma, et al.

17 Entitled Spouses Simplicio and Mila Cuaresma, for and in behalf of their deceased daughter Jasmin G.

Cuaresma v. White Falcon Services, Inc. and Becmen Services Exporter and Promotion, Inc. 18 Docketed
as CA-G.R. SP 80619 and 81030.

Decision G.R. Nos. 152642, 152710, 167590,

182978-79 & 184298-99

13

On April 7, 2009 the Court found Jasmins death not work-related or

work-connected since her rape and death did not occur while she was on

duty at the hospital or doing acts incidental to her employment. The Court

deleted the award of actual damages but ruled that Becmens corporate

directors and officers are solidarily liable with their company for its failure

to investigate the true nature of her death. Becmen and White Falcon

abandoned their legal, moral, and social duty to assist the Cuaresmas in

obtaining justice for their daughter. Consequently, the Court held the

foreign employer Rajab and Silsilah, White Falcon, Becmen, and the latters

corporate directors and officers jointly and severally liable to the Cuaresmas

for: 1) P2,500,000.00 as moral damages; 2) P2,500,000.00 as exemplary

damages; 3) attorneys fees of 10% of the total monetary award; and 4) cost

of suit.

On July 16, 2009 the corporate directors and officers of Becmen,

namely, Eufrocina Gumabay, Elvira Taguiam, Lourdes Bonifacio and Eddie

De Guzman (Gumabay, et al.) filed a motion for leave to Intervene. They

questioned the constitutionality of the last sentence of the second paragraph

of Section 10, R.A. 8042 which holds the corporate directors, officers and

partners jointly and solidarily liable with their company for money claims

filed by OFWs against their employers and the recruitment firms. On

September 9, 2009 the Court allowed the intervention and admitted

Gumabay, et al.s motion for reconsideration.

The key issue that Gumabay, et al. present is whether or not the 2nd
paragraph of Section 10, R.A. 8042, which holds the corporate directors,

officers, and partners of recruitment and placement agencies jointly and

solidarily liable for money claims and damages that may be adjudged

against the latter agencies, is unconstitutional.

In G.R. 167590 (the PASEI case), the Quezon City RTC held as

unconstitutional the last sentence of the 2nd paragraph of Section 10 of R.A.

Decision G.R. Nos. 152642, 152710, 167590,

182978-79 & 184298-99

14

8042. It pointed out that, absent sufficient proof that the corporate officers

and directors of the erring company had knowledge of and allowed the

illegal recruitment, making them automatically liable would violate their

right to due process of law.

The pertinent portion of Section 10 provides:

SEC. 10. Money Claims. x x x

The liability of the principal/employer and the

recruitment/placement agency for any and all claims under this section

shall be joint and several. This provision shall be incorporated in the

contract for overseas employment and shall be a condition precedent for

its approval. The performance bond to be filed by the

recruitment/placement agency, as provided by law, shall be answerable for

all money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate

officers and directors and partners as the case may be, shall

themselves be jointly and solidarily liable with the corporation or

partnership for the aforesaid claims and damages. (Emphasis supplied)

But the Court has already held, pending adjudication of this case, that

the liability of corporate directors and officers is not automatic. To make

them jointly and solidarily liable with their company, there must be a finding

that they were remiss in directing the affairs of that company, such as

sponsoring or tolerating the conduct of illegal activities.19 In the case of

Becmen and White Falcon,20 while there is evidence that these companies

were at fault in not investigating the cause of Jasmins death, there is no

mention of any evidence in the case against them that intervenors Gumabay,

et al., Becmens corporate officers and directors, were personally involved in

their companys particular actions or omissions in Jasmins case.

As a final note, R.A. 8042 is a police power measure intended to

regulate the recruitment and deployment of OFWs. It aims to curb, if not

eliminate, the injustices and abuses suffered by numerous OFWs seeking to

work abroad. The rule is settled that every statute has in its favor the

19 MAM Realty Development Corp. v. National Labor Relations Commission, 314 Phil. 838, 845 (1995).
20 G.R. 182978-79 and G.R. 184298-99.

Decision 15 G.R. Nos. 152642, 152710, 167590,

182978-79 & 184298-99

presumption of constitutionality. The Court cannot inquire into the wisdom

or expediency of the laws enacted by the Legislative Department. Hence, in

the absence of a clear and unmistakable case that the statute is

unconstitutional, the Court must uphold its validity.

WHEREFORE, in G.R. 152642 and 152710, the Court DISMISSES

the petitions for having become moot and academic.

In G.R. 167590, the Court SETS ASIDE the Decision of the Regional

Trial Court ofManila dated December 8, 2004 and DECLARES Sections 6,

7, and 9 of Republic Act 8042 valid and constitutional.

In G.R. 182978-79 and G.R. 184298-99 as well as in G.R. 167590, the

Court HOLDS the last sentence of the second paragraph of Section 10 of

Republic Act 8042 valid and constitutional. The Court, however,

RECONSIDERS and SETS ASIDE the portion of its Decision in G.R.

182978-79 and G.R. 184298-99 that held intervenors Eufrocina Gumabay,

Elvira Taguiam, Lourdes Bonifacio, and Eddie De Guzman jointly and

' solidarily liable with respondent Becmen Services Exporter and Promotion,

Inc. to spouses Simplicia and Mila Cuaresma for lack of a finding in those

cases that such intervenors had a part in the act or omission imputed to their

corporation.

SO ORDERED.
 THIRD DIVISION

ROSA C. RODOLFO, G.R. No. 146964

Petitioner,
Present:

QUISUMBING, J., Chairperson,

- versus - CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
PEOPLE OF THE Promulgated:
PHILIPPINES, August 10, 2006
Respondent.

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CARPIO MORALES, J.:

Petitioner was charged before the Regional Trial Court (RTC) of Makati for illegal recruitment
alleged to have been committed as follows:

That in or about and during the period from August to September 1984, in
Makati, Metro Manila, Philippines, and within the jurisdiction of this Honorable Court,
the said accused representing herself to have the capacity to contract, enlist and transport
Filipino workers for employment abroad, did then and there willfully and unlawfully, for
a fee, recruit and promise employment/job placement abroad to VILLAMOR
ALCANTARA, NARCISO CORPUZ,[1]NECITAS R. FERRE, GERARDO H.
TAPAWAN and JOVITO L. CAMA, without first securing the required license or
authority from the Ministry of Labor and Employment.[2]

After trial on the merits, Branch 61 of the Makati RTC rendered its Judgment on the case, [3] the
decretal portion of which reads:

WHEREFORE, PREMISES ABOVE CONSIDERED, the Court finds the

accused ROSA C. RODOLFO as GUILTY of the offense of ILLEGAL RECRUITMENT
and hereby sentences her [to] a penalty of imprisonment of EIGHT YEARS and to pay
the costs.[4] (Underscoring supplied)

In so imposing the penalty, the trial court took note of the fact that while the information reflected
the commission of illegal recruitment in large scale, only the complaint of the two of the five complainants
was proven.
 On appeal, the Court of Appeals correctly synthesized the evidence presented by the parties as
follows:

[The evidence for the prosecution] shows that sometime in August and
September 1984, accused-appellant approached private complainants Necitas Ferre and
Narciso Corpus individually and invited them to apply for overseas
employment in Dubai. The accused-appellant being their neighbor, private complainants
agreed and went to the formers office. This office which bore the business name Bayside
Manpower Export Specialist was in a building situated at Bautista St. Buendia, Makati,
Metro Manila. In that office, private complainants gave certain amounts to appellant for
processing and other fees. Ferre gave P1,000.00 as processing fee (Exhibit A) and
another P4,000.00 (Exhibit B). Likewise, Corpus gave appellant P7,000.00 (Exhibit D).
Appellant then told private complainants that they were scheduled to leave
for Dubai on September 8, 1984. However, private complainants and all the other
applicants were not able to depart on the said date as their employer allegedly did not
arrive. Thus, their departure was rescheduled to September 23, but the result was the
same. Suspecting that they were being hoodwinked, private complainants demanded of
appellant to return their money. Except for the refund of P1,000.00 to Ferre, appellant
was not able to return private complainants money. Tired of excuses, private
complainants filed the present case for illegal recruitment against the accused-appellant.

To prove that accused-appellant had no authority to recruit workers for overseas

employment, the prosecution presented Jose Valeriano, a Senior Overseas Employment
Officer of the Philippine Overseas Employment Agency (POEA), who testified that
accused-appellant was neither licensed nor authorized by the then Ministry of Labor and
Employment to recruit workers for overseas employment.

For her defense, appellant denied ever approaching private complainants to

recruit them for employment in Dubai. On the contrary, it was the private complainants
who asked her help in securing jobs abroad. As a good neighbor and friend, she brought
the private complainants to the Bayside Manpower Export Specialist agency because she
knew Florante Hinahon,[5] the owner of the said agency. While accused-appellant
admitted that she received money from the private complainants, she was quick to point
out that she received the same only in trust for delivery to the agency. She denied being
part of the agency either as an owner or employee thereof. To corroborate appellants
testimony, Milagros Cuadra, who was also an applicant and a companion of private
complainants, testified that appellant did not recruit them. On the contrary, they were the
ones who asked help from appellant. To further bolster the defense, Eriberto C. Tabing,
the accountant and cashier of the agency, testified that appellant is not connected with the
agency and that he saw appellant received money from the applicants but she turned them
over to the agency through either Florantino Hinahon or Luzviminda
Marcos.[6] (Emphasis and underscoring supplied)

In light thereof, the appellate court affirmed the judgment of the trial court but modified the penalty
imposed due to the trial courts failure to apply the Indeterminate Sentence Law.
 The appellate court thus disposed:

WHEREFORE, finding no merit in the appeal, this Court DISMISSES it and

AFFIRMS the appealed Decision EXCEPT the penalty x x x which is hereby changed to
five (5) years as minimum to seven (7) years as maximum with perpetual disqualification
from engaging in the business of recruitment and placement of workers.[7] (Underscoring
supplied)

Petitioners Motion for Reconsideration having been denied,[8] the present petition was filed,
faulting the appellate court

x x x IN GIVING CREDENCE TO THE TESTIMONIES OF THE COMPLAINING

WITNESSES, [AND]

II

x x x IN FINDING THE PETITIONER-ACCUSED GUILTY WHEN THE

PROSECUTION FAILED TO PROVE HER GUILT BEYOND REASONABLE
DOUBT.[9] (Underscoring supplied)

Petitioner bewails the failure of the trial court and the Court of Appeals to credit the testimonies of
her witnesses, her companion Milagros Cuadra, and Eriberto C. Tabing who is an accountant-cashier of
the agency.

Further, petitioner assails the trial courts and the appellate courts failure to consider that the
provisional receipts she issued indicated that the amounts she collected from the private complainants
were turned over to the agency through Minda Marcos and Florante Hinahon. At any rate, she draws
attention to People v. Seoron[10] wherein this Court held that the issuance or signing of receipts for
placement fees does not make a case for illegal recruitment.[11]
The petition fails.
 Articles 38 and 39 of the Labor Code, the legal provisions applicable when the offense charged
was committed,[12] provided:

ART. 38. Illegal Recruitment. (a) Any recruitment activities, including the
prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-
licensees or non-holders of authority shall be deemed illegal and punishable under Article
39 of this Code. x x x

Article 39. Penalties. x x x x

(c) Any person who is neither a licensee nor a holder of authority under this Title
found violating any provision thereof or its implementing rules and regulations shall, upon
conviction thereof, suffer the penalty of imprisonment of not less than four years nor more
than eight years or a fine of not less than P20,000 nor more than P100,000 or both such
imprisonment and fine, at the discretion of the court;

x x x x (Underscoring supplied)

The elements of the offense of illegal recruitment, which must concur, are: (1) that the offender
has no valid license or authority required by law to lawfully engage in recruitment and placement of
workers; and (2) that the offender undertakes any activity within the meaning of recruitment and
placement under Article 13(b), or any prohibited practices enumerated under Article 34 of the Labor
Code.[13] If another element is present that the accused commits the act against three or more persons,
individually or as a group, it becomes an illegal recruitment in a large scale.[14]

Article 13 (b) of the Labor Code defines recruitment and placement as [a]ny act of canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract
services, promising or advertising for employment, locally or abroad, whether for profit or not.
(Underscoring supplied)
That the first element is present in the case at bar, there is no doubt. Jose Valeriano, Senior
Overseas Employment Officer of the Philippine Overseas Employment Administration, testified that the
records of the POEA do not show that petitioner is authorized to recruit workers for overseas
employment.[15] A Certification to that effect was in fact issued by Hermogenes C. Mateo, Chief of the
Licensing Division of POEA.[16]

Petitioners disclaimer of having engaged in recruitment activities from the very start does not
persuade in light of the evidence for the prosecution. In People v. Alvarez, this Court held:
 Appellant denies that she engaged in acts of recruitment and placement without first
complying with the guidelines issued by the Department of Labor and Employment. She
contends that she did not possess any license for recruitment, because she never engaged in
such activity.

We are not persuaded. In weighing contradictory declarations and

statements, greater weight must be given to the positive testimonies of the prosecution
witnesses than to the denial of the defendant. Article 38 (a) clearly shows that illegal
recruitment is an offense that is essentially committed by a non-licensee or non-holder of
authority. A non-licensee means any person, corporation or entity to which the labor
secretary has not issued a valid license or authority to engage in recruitment and placement;
or whose license or authority has been suspended, revoked or cancelled by the POEA or the
labor secretary. A license authorizes a person or an entity to operate a private employment
agency, while authority is given to those engaged in recruitment and placement activities.

xxxx

That appellant in this case had been neither licensed nor authorized to recruit
workers for overseas employment was certified by Veneranda C. Guerrero, officer-in-charge
of the Licensing and Regulation Office; and Ma. Salome S. Mendoza, manager of the
Licensing Branch both of the Philippine Overseas Employment Administration. Yet, as
complainants convincingly proved, she recruited them for jobs in Taiwan.[17] (Italics in the
original; underscoring supplied)

The second element is doubtless also present. The act of referral, which is included in
recruitment,[18] is the act of passing along or forwarding of an applicant for employment after an initial
interview of a selected applicant for employment to a selected employer, placement officer or
bureau.[19] Petitioners admission that she brought private complainants to the agency whose owner she
knows and her acceptance of fees including those for processing betrays her guilt.

That petitioner issued provisional receipts indicating that the amounts she received from the
private complainants were turned over to Luzviminda Marcos and Florante Hinahon does not free her from
liability. For the act of recruitment may be for profit or not. It is sufficient that the accused promises or
offers for a fee employment to warrant conviction for illegal recruitment.[20] As the appellate court stated:

x x x Sec. 13(b) of P.D. 442 [The Labor Code] does not require that the recruiter
receives and keeps the placement money for himself or herself. For as long as a person
who has no license to engage in recruitment of workers for overseas employment offers
for a fee an employment to two or more persons, then he or she is guilty of illegal
recruitment.[21]
Parenthetically, why petitioner accepted the payment of fees from the private complainants when,
in light of her claim that she merely brought them to the agency, she could have advised them to directly
pay the same to the agency, she proferred no explanation.
 On petitioners reliance on Seoron,[22] true, this Court held that issuance of receipts for placement
fees does not make a case for illegal recruitment. But it went on to state that it is rather the undertaking of
recruitment activities without the necessary license or authority that makes a case for illegal
recruitment.[23]

A word on the penalty. Indeed, the trial court failed to apply the Indeterminate Sentence Law
which also applies to offenses punished by special laws.

Thus, Section 1 of Act No. 4103 (AN ACT TO PROVIDE FOR AN INDETERMINATE
SENTENCE AND PAROLE FOR ALL PERSONS CONVICTED OF CERTAIN CRIMES BY THE
COURTS OF THE PHILIPPINE ISLANDS; TO CREATE A BOARD OF INDETERMINATE
SENTENCE AND TO PROVIDE FUNDS THEREFOR; AND FOR OTHER PURPOSES) provides:

SECTION 1. Hereafter, in imposing a prison sentence for an offense punished by

the Revised Penal Code, or its amendments, the court shall sentence the accused to an
indeterminate sentence the maximum term of which shall be that which, in view of the
attending circumstances, could be properly imposed under the rules of the said Code, and
the minimum which shall be within the range of the penalty next lower to that prescribed
by the Code for the offense; and if the offense is punished by any other law, the court
shall sentence the accused to an indeterminate sentence, the maximum term of which
shall not exceed the maximum fixed by said law and the minimum shall not be less than
the minimum term prescribed by the same. (As amended by Act No. 4225) (Underscoring
supplied)

While the penalty of imprisonment imposed by the appellate court is within the prescribed penalty
for the offense, its addition of perpetual disqualification from engaging in the business of recruitment and
placement of workers is not part thereof. Such additional penalty must thus be stricken off.

WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of
Appeals are AFFIRMED with MODIFICATION in that the accessory penalty imposed by it consisting
of perpetual disqualification from engaging in the business of recruitment and placement of workers
is DELETED.

Costs against petitioner.

SO ORDERED.
 THIRD DIVISION

PEOPLE OF THE PHILIPPINES, G.R. No. 181245

Appellee,
Present:
Ynares-Santiago, J. (Chairperson),
- versus - Austria-Martinez,

Chico-Nazario,

Nachura, and

Reyes, JJ.

JIMMY ANG @ ANG TIAO LAM

and HUNG CHAO NAN, Promulgated:

Appellant.

August 6, 2008

x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari assails the September 20, 2007 Decision[1] of the Court of
Appeals in CA-G.R. CR-H.C. No. 02374, affirming the Judgment[2] of the Regional Trial Court of
Manila, Branch 12, in Crim. Case No. 00-184050, finding appellant Jimmy Ang @ Ang Tiao Lam &
Hung Chao Nan guilty of illegal recruitment in large scale and sentencing him to suffer the penalty of life
imprisonment and to pay a fine of One Hundred Thousand Pesos (P100,000.00) plus actual
damages,[3] with the modification that appellant is further ordered to pay legal interest on the award of
actual damages from the time of the filing of the Information until fully paid.

The facts of the case are as follows:

 On June 28, 2000, appellant was charged with violation of Section 6 (l) and (m) of Republic Act
No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995. The accusatory portion of the
Information reads:

That in or about and during the period comprised between November 1999 and June 23,
2000, inclusive, in the City of Manila, Philippines, the said accused, conspiring and
confederating with another whose true name, real identity and present whereabouts is
unknown and mutually helping each other, representing themselves to have the capacity
to contract, hire, enlist and transport Filipino workers for employment abroad, did then
and there willfully and unlawfully, for a fee, recruit and promise employment as factory
workers in Taiwan, and in consideration thereof charge and accept, directly or indirectly
from the following:

PHEX M. GARLEJO P 20,000.00

EDNA PARAGAS P115,000.00

SPOUSES MAGDALENO DIOSDADO S.

ORDONIO & MARLENE G. ORDONIO P150,000.00

ELLEN B. CANLAS P 50,000.00

as placement and/or processing fee for overseas employment which amounts are greater
than that specified in the schedule of allowable fees prescribed by the Secretary of Labor
and Employment and failed to actually deploy them without valid reasons and failed to
reimburse expenses incurred by them, despite demands and in spite of the fact that the
deployment of the said PHEX M. GARLEJO, EDNA PARAGAS, Sps. MAGDALENO
DIOSDADO S. ORDONIO & MARLENE G. ORDONIO and ELLEN B. CANLAS did
not actually take place without their fault.

Contrary to law.[4]

Appellant pleaded not guilty when arraigned.

Ellen Canlas testified that on January 17, 2000, she was introduced to appellant who promised her a job as
factory worker in Taiwan. Canlas was interested in working abroad thus, she gave appellant the amount of
P50,000.00 which would be used allegedly to defray the expenses for the processing of her
papers. Appellant issued Canlas a receipt for P50,000.00.

Edna Paragas also testified that she met appellant in November, 1999. Lured by the promise of a job
in Taiwan, Paragas gave appellant a total amount of P115,000.00 for which she was issued a receipt. She
was told that the money would be spent for the processing of her papers.

Marlene Ordonio also applied for a job in Taiwan through appellant. She gave him the amount of
P150,000.00 to be used allegedly for the processing of her papers. Appellant issued a receipt for the said
amount.

Phex M. Garlejo also paid P20,000.00 to appellant who promised him a job as a factory worker
in Taiwan.

When appellant failed to deploy the private complainants as factory workers in Taiwan, they decided to
file a complaint before the Philippine Overseas Employment Agency (POEA) who endorsed them to the
Philippine Anti-Organized Crime Task Force (PAOCTF). Since appellant was asking for additional funds
from Garlejo, an entrapment operation was planned.

On June 23, 2000, Canlas, Paragas, Ordonio and Garlejo met appellant inside Universal Restaurant
along Rizal Avenue, Manila. After Garlejo handed to appellant the envelope containing the marked
money, appellant issued a receipt for P30,000.00. Thereafter, he proceeded to count the money
whereupon he was arrested by the PAOCTF operatives.

Appellant, who was the sole witness for the defense, testified that he was a factory worker
in Taiwan. Sometime in October 1999, he met Erolyn Bello and Marlene Ordonio who requested him to
look for a broker in Taiwan who will affiliate with a local recruitment agency for the deployment of
factory workers. When he returned to Taiwan, he allegedly met a certain Leo Liao who agreed to act as
broker.

He admitted meeting private complainants and receiving money from them. However, he alleged that the
amounts were in payment for the expenses he incurred in scouting for a broker in Taiwan. He also argued
that private complainants did not meet Liao, the alleged broker, because during their scheduled meeting,
the private complainants suddenly felt shy.

Finally, he alleged that during the entrapment operation, he was forced by the PAOCTF to sign the
acknowledgement receipt; and that he never received the money because he was handcuffed.

After trial on the merits, the trial court rendered judgment, the dispositive portion of which provides:

WHEREFORE, the foregoing premises considered, judgment is hereby rendered finding

accused JIMMY ANG also known as ANG TIAO LAM and HUNG CHAO-NAN guilty
beyond reasonable doubt of the crime of Illegal Recruitment (in Large
Scale). Accordingly, he is hereby sentenced to suffer the penalty of LIFE
IMPRISONMENT and to pay a fine of One Hundred Thousand Pesos
(P100,000.00). Moreover, he is hereby ordered to pay actual damages, to the
complainants in the following amounts, to wit:

PHEX M. GARLEJO P 20,000.00

EDNA PARAGAS P115,000.00

SPOUSES MAGDALENO DIOSDADO S.

ORDONIO & MARLENE G. ORDONIO P150,000.00

ELLEN B. CANLAS P 50,000.00

SO ORDERED.[5]

Appellant filed an appeal before the Court of Appeals raising the following as errors:
 I. THE TRIAL COURT GRAVELY ERRED IN CONVICTING THE
ACCUSED-APPELLANT OF THE CRIME CHARGED DESPITE THE
PROSECUTIONS FAILURE TO ESTABLISH HIS GUILT BEYOND
REASONABLE DOUBT.

II. THE TRIAL COURT GRAVELY ERRED IN CONVICTING THE

ACCUSED-APPELLANT OF THE CRIME CHARGED SINCE NO
EVIDENCE WAS PRESENTED BY THE PROSECUTION SHOWING THAT
HE HAD NO LICENSE OR AUTHORITY TO RECRUIT BY THE
DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE).[6]

In his Brief, appellant conceded that the prosecution satisfactorily established that he engaged in
the act of recruitment and placement of workers for deployment abroad; however, he argued that he
cannot be held liable for illegal recruitment because it was not shown that he has not secured a license or
authority to recruit or deploy workers.[7]

The Office of the Solicitor General (OSG) countered that the testimony of the PAOCTF agents
that upon investigation with the POEA, they discovered that appellant is a non-licensee or non-holder of
authority to recruit and deploy workers abroad, is sufficient proof that indeed, he is not authorized to
engage in recruitment activities. The OSG also recommended that the penalty of fine imposed upon
appellant be increased from P100,000.00 to P500,000.00 and that the award of actual damages should
earn interest from the time of the filing of the information until fully paid.

On September 20, 2007, the Court of Appeals rendered the herein assailed Decision, the
dispositive portion of which provides:

WHEREFORE, the instant appeal is DISMISSED for lack of merit. The judgment of the
court a quo dated April 5, 2006 is AFFIRMED with the MODIFICATION that accused-
appellant is ORDERED to pay the private complainants legal interest on the following
amounts from the time of the filing of the Information until fully paid:
 1. PHEX M. GARLEJO P 20,000.00

2. EDNA PARAGAS P115,000.00

3. SPOUSES MAGDALENO DIOSDADO S.

ORDONIO & MARLENE G. ORDONIO P150,000.00

4. ELLEN B. CANLAS P 50,000.00

SO ORDERED.[8]

Hence, the instant petition.

On March 5, 2008, this Court resolved to notify the parties to file their respective supplemental
briefs, if they so desire, within 30 days from notice.[9] On May 2, 2008, appellant filed a Manifestation
and Motion that he is dispensing with the filing of the supplemental brief. [10] On May 7, 2008, the OSG
likewise manifested that it is no longer filing its supplemental brief. Hence, this case is now deemed
submitted for resolution.

The petition lacks merit.

Appellant was charged with violation of Section 6 (l) and (m) of Republic Act No. 8042 or
the Migrant Workers and Overseas Filipinos Act of 1995, which provides:

SEC. 6. Definition. For purposes of this Act, illegal recruitment shall mean any
act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring
workers and includes referring contract services, promising or advertising for
employment abroad, whether for profit of not, when undertaken by a non-licensee or non-
holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as
amended, otherwise known as the Labor Code of the Philippines: Provided, That any
such non-licensee or non-holder who, in any manner, offers or promises for a fee
employment abroad to two or more persons shall be deemed engaged. It shall likewise
 include the following acts, whether committed by any person, whether a non-
licensee, non holder, licensee or holder of authority:

xxxx

(l) Failure to actually deploy without valid reason as determined by the

Department of Labor and Employment; and

(m) Failure to reimburse expenses incurred by the worker in connection

with his documentation and processing for purposes of deployment, in cases
where the deployment does not actually take place without the workers fault.

x x x x. (Emphasis supplied)

Appellant conceded in his Brief that the prosecution satisfactorily established that he engaged in
the act of recruitment and placement of workers for deployment abroad. It was likewise proven that the
private complainants were never deployed to Taiwan as factory workers. Moreover, it was also settled
that he received certain amounts allegedly to be used to cover the expenses for the documentation and
processing of the complainants papers, but said amounts were never reimbursed to them despite their non-
deployment and repeated demands. However, appellant argued that he cannot be held liable for illegal
recruitment because it was not shown that he has not secured a license or authority to recruit or deploy
workers.

This contention lacks basis. It is clearly provided in Section 6 of Republic Act No. 8042 that any
person, whether a non-licensee, non-holder, licensee or holder of authority may be held liable for
illegal recruitment for certain acts as enumerated in paragraphs (a) to (m) thereof.Since appellant was
charged with violation of Sec. 6 (l) and (m), there is no more need to prove whether he is a licensee or not
because it is no longer an element of the crime. The trial court and the Court of Appeals therefore
correctly found appellant guilty as charged.
 In the instant case, appellant is guilty of illegal recruitment in large scale because it was
committed against the four private complainants. This is in accordance with the penultimate paragraph of
Section 6 of Republic Act No. 8042 which provides, thus:

Illegal recruitment is deemed committed by a syndicate if carried out by a group

of three (3) or more persons conspiring or confederating with one another. It is deemed
committed in large scale if committed against three (3) or more persons individually
or as a group.

The trial court, as affirmed by the Court of Appeals, imposed upon the appellant the penalty of
life imprisonment and a fine of P100,000.00 plus actual damages, with interest thereon. However, the fine
of P100,000.00 should be increased to P500,000.00 pursuant to Section 7(b) of Republic Act No. 8042
which reads, thus:

(b) The penalty of life imprisonment and a fine of not less than Five hundred
thousand pesos (P500,000.00) nor more than One million pesos (P1,000,000.00) shall be
imposed if illegal recruitment constitutes economic sabotage as defined therein.

Illegal recruitment committed by a syndicate or in large scale is considered an offense involving

economic sabotage.

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals dated
September 20, 2007 in CA-G.R. CR-H.C. No. 02374, affirming with modification the Judgment of the
Regional Trial Court of Manila, Branch 12, in Crim. Case No. 00-184050, finding appellant Jimmy Ang
@ Ang Tiao Lam & Hung Chao Nan guilty of illegal recruitment in large scale and sentencing him to
suffer the penalty of life imprisonment and to pay actual damages with legal interest thereon,
is AFFIRMED with MODIFICATION that the penalty of fine is INCREASED to P500,000.00.

SO ORDERED.
 SECOND DIVISION

THE PEOPLE OF THE PHILIPPINES, G.R. No. 178204

Appellee, [Formerly G.R. No. 156497]

Present:

QUISUMBING, J.,

- versus - Chairperson,

CARPIO MORALES,

TINGA,

VELASCO, JR., and

MARCOS GANIGAN, BRION, JJ.

Appellant.

Promulgated:

August 20, 2008

x---------------------------------------------------------------------------------x

DECISION

TINGA, J.:
 Before us for automatic review is the Decision[1] dated 14 November 2006 of the Court of
Appeals affirming the judgment of conviction[2] for the crime of illegal recruitment rendered by the
Regional Trial Court (RTC) of Malolos, Bulacan, Branch 21.[3]

In an Information filed before the RTC, accused Ruth, Monchito, Eddie, Avelin Sulaiman and
Marcos (appellant), all surnamed Ganigan, were charged with illegal recruitment committed as follows:

That sometime between the period from July and August 1998 in Plaridel, Bulacan and
within the jurisdiction of this Honorable Court, the above-named accused, representing
themselves to have the capacity to contract, enlist and transport workers for employment
in New Zealand, conspiring, confederating and mutually helping one another, did then
and there willfully, unlawfully and feloniously recruit for a fee the following persons
namely: MAURO EUSEBIO, VALENTINO CRISOSTOMO and LEONORA
DOMINGO, all residents of Sto. Nio, Plaridel, Bulacan for employment in New Zealand,
without first obtaining the required license and/or authority from the Philippine Overseas
Employment Administration.

CONTRARY TO LAW.[4]

Only appellant was arrested. The other accused remained at large.

Appellant, assisted by counsel, pleaded not guilty on arraignment. Trial ensued.

The three private complainants, Leonora Domingo (Leonora), Mauro Reyes (Mauro), and Valentino
Crisostomo (Valentino), testified for the prosecution.
 They narrated that they first met appellant in the house of Manolito Reyes in Plaridel, Bulacan in
June 1998. Appellant allegedly made representations to private complainants, among others, that his
brother, Monchito, and his sister-in-law, Ruth, had the capacity to recruit apple and grape pickers for
employment in New Zealand.[5]

On 5 July 1998, the group, composed of the three private complainants and 35 others, [6] went to
La Union where they met with Monchito and Ruth. Ruth proceeded to explain their prospective
employment with a $1,200.00 monthly salary. Ruth also required the group to attend bible study sessions
every Sunday because their prospective employer is a devout Catholic. Pursuant to their desire to work
in New Zealand, the group attended bible study from 5 July to December 1998.[7]

Each member of the group was asked to pay P2,000.00 as assurance fee.[8] Leonora paid an
additional P400.00 for her National Statistics Office-issued birth certificate,[9] P500.00 for physical
examination and P320.00 for medical fee.[10] Mauro gave an additional P320.00 for medical
expenses[11] whereas Valentino shelled out P180.00 for pictures, P1,000.00 for bio-data and P350.00 for
medical examination.[12] The three attested that appellant received their payment and a document was
prepared by one of their companions as evidence of the receipt.[13] The exhibits submitted by the
prosecution show that Monchito acknowledged having received a total of P101,480.00 from various
applicants.[14]Other documents showed that appellant and Ruth received payment from the applicants.[15]

Ruth and appellant allegedly promised them that they would leave for New Zealand before October 1998.
When they were unable to leave, however, they were told that their prospective employer would arrive in
the Philippines on 22 November 1998. On the designated date, they were informed that their prospective
employer fell down the stairway of the airplane. An interview was then scheduled on 29 December
1998 but on that day, they were told that their prospective employer had been held up. This prompted the
complainants to go to the Philippine Overseas Employment Administration (POEA) to check on the
background of the accused.
They learned that appellant, Ruth and Monchito do not have the authority to recruit workers for
employment abroad.[16] Certifications to that effect were issued by the POEA.[17]

Appellant denied having recruited private complainants for work abroad. He claimed that he himself was
also a victim as he had also paid P3,000.00 for himself and P2,000.00 for his daughter. He likewise
attended the bible study sessions as a requirement for the overseas employment.[18] He contended that he
was merely implicated in the case because he was the only one apprehended among the accused.[19]

The trial court rendered judgment convicting appellant of the crime of illegal recruitment. The dispositive
portion of the decision reads:

Wherefore, all premises considered, this Court finds and so holds that the prosecution
was able to establish by proof beyond reasonable doubt the criminal culpability of the
accused Marcos Ganigan on the offense charged against him. Accordingly, this Court
finds him guilty of the crime of illegal recruitment in large scale resulting in economic
sabotage as defined under Section 6 and penalized under Section 7(b) of Republic Act
No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of
1995. Accordingly, he is sentenced to suffer the penalty of life imprisonment and to pay a
fine of P500,000.00.

Accused Marcos Ganigan is also directed to pay complainants Leonora Domingo, Mauro
Reyes and Valentino Crisostomo the amounts of P2,400.00 each plus the sum of P500.00
for Leonora Domingo for actual damages and P25,000.00 as and for moral damages.

With regard to accused Ruth Ganigan, Monchito Ganigan, Eddie Ganigan and Avelin
Sulaiman Ganigan, who remain at large until this time, the case against them is ordered
archived. Let an alias Warrant of arrest be issued for their apprehension.

SO ORDERED.[20]
The trial court found that all elements of illegal recruitment in large scale had been established through
the testimonial and documentary evidence of the prosecution.

In view of the penalty imposed, the case was elevated to this Court on automatic
review. However, this Court resolved to transfer the case to the Court of Appeals for intermediate review
in light of our ruling in People v. Mateo.[21]

On 14 November 2006, the Court of Appeals affirmed the trial courts decision.

Upon receipt of the unfavorable decision, appellant filed a notice of appeal. On 15 October 2007,
this Court resolved to accept the case and to require the parties to simultaneously submit their respective
supplemental briefs. The Office of the Solicitor General (OSG) filed a Manifestation and
Motion[22] stating that it would no longer file any supplemental briefs and instead adopt its appellee's brief
filed on 12 January 2006. Appellant likewise manifested that he would merely adopt his appellant's
brief.[23]

Appellant argues that the prosecution has failed to establish his guilt beyond reasonable doubt. He
maintains that he did not participate in any recruitment activity and that the alleged payments made by
private complainants were for membership in the Christian Catholic Mission, as shown by the fact that
private complainants have regularly attended bible study sessions from 5 July to November 1998. He also
points out that nothing on record would show that the necessary training or orientation seminar pertaining
to the supposed employment has ever been conducted.

Assuming arguendo that the Christian Catholic Mission was only a front to an illegal venture,
appellant avers that he was not part of the conspiracy because he was a victim himself as he in fact also
paid assurance fees for membership in the Christian Catholic Mission. He laments that aside from
introducing private complainants to Ruth, he has not done any other act tantamount to recruitment.
 The OSG defended the decision of the trial court in giving full faith and credence to the
testimonies of the complaining witnesses. It contends that there is no showing that the victims were
impelled by any ill motive to falsely testify against appellant. It asserts that the collective testimony of the
witnesses has categorically established appellants participation in the crime.[24]

The crime of illegal recruitment is committed when these two elements concur: (1) the offenders
have no valid license or authority required by law to enable them to lawfully engage in the recruitment
and placement of workers; and (2) the offenders undertake any activity within the meaning of recruitment
and placement defined in Article 13(b) or any prohibited practices enumerated in Article 34 of the Labor
Code. In case of illegal recruitment in large scale, a third element is added that the accused commits the
acts against three or more persons, individually or as a group.[25]

Article 13(b) defines recruitment and placement as "any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring workers; and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not. In the simplest terms, illegal
recruitment is committed by persons who, without authority from the government, give the impression
that they have the power to send workers abroad for employment purposes.[26]

Since appellant, along with the other accused, made misrepresentations concerning their
purported power and authority to recruit for overseas employment, and in the process collected from
private complainants various amounts in the guise of placement fees, the former clearly committed acts
constitutive of illegal recruitment. In fact, this Court held that illegal recruiters need not even expressly
represent themselves to the victims as persons who have the ability to send workers abroad. It is enough
that these recruiters give the impression that they have the ability to enlist workers for job placement
abroad in order to induce the latter to tender payment of fees.[27]

It is clear from the testimonies of private complainants that appellant undertook to recruit them
for a purported employment in New Zealand and in the process collected various amounts from them as
assurance fees and other fees related thereto.
Private complainants testified in a clear, positive and straightforward manner. Leonora testified that
appellant recruited her to work in New Zealand as a fruit picker and was promised by Ruth a monthly
salary of $1,200.00. She was required to pay an assurance fee of P2,000.00. She later learned that
appellant and his cohorts had not been licensed by the POEA to recruit for overseas employment. [28] On
cross-examination, she confirmed that she turned over the amount of fees to appellant with the
understanding that such payment was for employment abroad.[29]

Mauro similarly recounted that he was introduced to Monchito and Ruth by appellant as an applicant for
farm work in New Zealand. He was told to prepare P2,000.00 as assurance fee, which he paid to
appellant. When he was unable to leave, he checked with the POEA and found out that appellant had no
license to recruit.[30] During the cross-examination, Mauro was firm in his stance that he paid the amount
of P2,000.00 as assurance of employment in New Zealand. Furthermore, he regularly attended the bible
study as a requirement for said employment.[31]

Valentinos testimony corroborated that of Leonora and Mauro.[32]

The trial court found these testimonies credible and convincing.

Well-settled is the doctrine that great weight is accorded to the factual findings of the trial court
particularly on the ascertainment of the credibility of witnesses; this can only be discarded or disturbed
when it appears in the record that the trial court overlooked, ignored or disregarded some fact or
circumstance of weight or significance which if considered would have altered the result.[33] In the present
case, we find no reason to depart from the rule.
 Verily, we agree with the OSG that the testimonies of private complainants have adequately
established the elements of the crime, as well as appellants indispensable participation therein. Appellant
recruited at least three persons, the private complainants in this case, giving them the impression that he
and his relatives had the capability of sending them to New Zealand for employment as fruit pickers. The
OSG adds that appellant went to Bulacan to invite the victims and accompanied them to a fellowship and
briefing in La Union; that appellant misrepresented that joining the religious group would ensure their
overseas employment; and that appellant without any license or authority to recruit, collected various
amounts from private complainants.

Appellant miserably failed to convince this Court that the payments made by the complainants
were actually for their membership in the religious organization. He did not present any document to
prove this allegation.

For their part, private complainants were adamant that the payments made to appellant were for
purposes of employment to New Zealand.They further explained that their participation in the bible study
sessions was but a requirement imposed by appellant because their prospective employer was also a
member of the same religious group.

Moreover, appellant has failed to rebut the evidence presented by the prosecution consisting of a
receipt of payment signed by him.[34] His flimsy denial that the signature on the receipt was not his own
does not merit consideration in light of the trial courts contrary finding.

As between the positive and categorical testimonies of private complainants and the
unsubstantiated denial proffered by appellant, this Court is inclined to give more weight to the former.

In sum, appellant is correctly found guilty of large scale illegal recruitment tantamount to
economic sabotage.
 Under Section 7(b) of Republic Act No. 8042, the penalty of life imprisonment and a fine of not
less than P500,000.00 nor more than P1,000.000.00 shall be imposed if illegal recruitment constitutes
economic sabotage.

WHEREFORE, premises considered, the decision of the Court of Appeals in CA-G.R. CR-H.C.
No. 00867 is AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

PEOPLE OF THE PHILIPPINES, G.R. No. 180926

Plaintiff-Appellee,
Present:
QUISUMBING, J., Chairperson,
- versus - CARPIO MORALES,
TINGA,
VELASCO, JR., and
BRION, JJ.

LOURDES VALENCIANO y Promulgated:

DACUBA,
Accused-Appellant. December 10, 2008
x-----------------------------------------------------------------------------------------x

DECISION
VELASCO, JR., J.:

This is an appeal from the Decision[1] dated July 24, 2007 of the Court of Appeals (CA) in CA-G.R. CR-
H.C. No. 01390 which upheld the Decision[2] of the Regional Trial Court (RTC), Branch 116
in Pasay City in Criminal Case No. 97-9851. The RTC convicted Lourdes Valenciano of the crime of
Illegal Recruitment in Large Scale.

The Facts

In May 1996, Lourdes Valenciano, claiming to be an employee of Middle East International Manpower
Resources, Inc., went with one Susie Caraeg to the house of Agapito De Luna, and told him he could
apply for a job in Taiwan. A week later, De Luna went to Valencianos house, there to be told to undergo a
medical examination, with the assurance that if there were a job order abroad, he would be able to
leave. He was also told that the placement fee for his employment as a factory worker in Taiwan was PhP
70,000.

After passing the medical examination, De Luna paid Valenciano at the latters residence the following
amounts: PhP 20,000 on June 21, 1996; PhP 20,000 on July 12, 1996; and PhP 30,000 on August 21,
1996. The first and last payments were turned over by Valenciano to Teresita Imperial, who issued the
corresponding receipts, and the second payment was turned over by Valenciano to Rodante Imperial, who
also issued a receipt.

Also in May 1996, Valenciano visited the house of Allan De Villa, accompanied by Euziel N. Dela
Cuesta, Eusebio T. Candelaria, and De Luna, to recruit De Villa as a factory worker in Taiwan. De Villa
was also asked for PhP 70,000 as placement fee. He paid Valenciano the following amounts: PhP 20,000
on May 16, 1996 at Valencianos residence; PhP 20,000 on May 30, 1996 at the Rural Bank of Calaca,
Batangas; PhP 20,000 on July 8, 1996 at Valencianos residence; and PhP 10,000 on August 14, 1996, also
at her residence. Valenciano turned over the amounts to either Teresita or Rodante. Teresita issued
receipts for the May 16, July 8, and August 14, 1996 payments, while Rodante issued a receipt for the
payment made on May 30, 1996.

On May 20, 1996, Valenciano, accompanied by Rodante and Puring Caraeg, went to the house of Dela
Cuesta to recruit her for employment as a factory worker in Taiwan. Dela Cuesta paid Valenciano PhP
20,000 as initial payment on May 20, 1996. On May 30, 1996, she paid Valenciano another PhP 20,000.
On August 12, 1996, she paid PhP 15,000, and on August 21, 1996, she paid PhP 7,000. Valenciano
turned the May 20 and 30, 1996 payments over to Rodante, who issued receipts for these payments. The
payments made on August 12 and 21, 1996 were turned over to Teresita, who also issued receipts for
them. These payments were to cover the placement fee and other expenses for the processing of the
requirements for the employment of Dela Cuesta in Taiwan.

On May 1, 1996, Valenciano, with Rodante, Teresita, and Rommel Imperial, went to Lian, Batangas to
recruit workers for employment abroad. Candelaria applied for a job as a factory worker in Taiwan when
Valenciano went to his residence in Lian. Valenciano asked him for an initial payment of PhP
20,000. On May 30, 1996, Candelaria paid Valenciano PhP 20,000 when she returned to Lian. He then
paid PhP 20,000 on June 24, 1996 and PhP 29,000 on July 17, 1996 at Valencianos residence
in Manila. These payments were to cover the placement fee and the expenses for the processing of his
passport and other papers connected with his application for employment as a factory worker
in Taiwan. The payments made on May 30 and July 17, 1996 were turned over to Rodante, who issued a
receipt for the said payments. The payment made on June 24, 1996was turned over by Valenciano to
Teresita.

After the payments were made, Valenciano brought the prospective workers to the office of Middle East
International Manpower Resources, Inc. in Pasay City, where they were made to fill out application forms
for their employment as factory workers in Taiwan. The complainants were introduced to Romeo
Marquez, alias Rodante Imperial, Teresita Marquez, alias Teresita Imperial, and Rommel Marquez, alias
Rommel Imperial, whom Valenciano made to appear as the owners of the employment agency. She
assured the prospective workers that they could leave for Taiwanwithin one month from the filing of
their applications. During the period material, they have not yet found employment as factory workers
in Taiwan.

Valenciano, Rodante, Teresita, and Rommel were charged with the offense of illegal recruitment in large
scale, as defined under Article 13(b) of Presidential Decree No. (PD) 442, otherwise known as the Labor
Code of the Philippines, as amended, in relation to Art. 38(a), and penalized under Art. 39(c) of the Code,
as amended by PD 1920 and PD 2018. The Information reads as follows:
That sometime in May, 1996 to August, 1996, or thereabout, in the City of Pasay, Metro
Manila, Philippines, and within the jurisdiction of this Honorable Court, the above-named
accused, representing to have the capacity, authority or license to contract, enlist and
deploy or transport workers for overseas employment, conspiring, confederating, and
mutually helping each other, did then and there, wilfully, unlawfully and criminally
recruit and promise to deploy the herein complainants, namely, Agapito R. De Luna,
Allan Ilagan De Villa, Euziel N. Dela Cuesta and Eusebio T. Candelaria, as factory
workers in Taiwan, in exchange for placement, processing and other fees ranging from
P62,000.00 to P70,000.00 or a total of P271,000.00, without first obtaining the required
license and/or authority from the Philippine Overseas Employment Administration
(POEA).

CONTRARY TO LAW.[3]

Accused-appellant Valenciano pleaded not guilty and waived the pre-trial. The other three accused
remained at large.

The RTC found accused-appellant guilty, the dispositive portion of the decision reading as follows:
WHEREFORE, accused Lourdes Valenciano y Dacuba is found guilty beyond reasonable
doubt of the offense of illegal recruitment in large scale as charged in the aforequoted
Information; and she is sentenced to suffer the penalty of life imprisonment and to pay a
fine of P100,000.00.

She is also ordered to indemnify complainants Agapito R. de Luna, Allan Ilagan de Villa,
Euziel N. dela Cuesta and Eusebio T. Candelaria the amounts of P70,000.00, P70,000.00,
P62,000.00 and P69,000.00, respectively, as reparation of the damage caused.

No other civil liability may be adjudged against the accused for lack of any factual or
legal basis therefor.

SO ORDERED.[4]
Accused-appellant appealed to this Court, but the case was transferred to the CA through a
Resolution dated September 6, 2004, following People v. Mateo.[5]
 The CA, in CA-G.R. CR-H.C. No. 01390, affirmed the decision of the trial court finding accused-
appellant guilty of the offense charged.

Hence, we have this appeal.

The Issues

Accused-appellant raises the following assignment of errors: (1) the lower court gravely erred in not
acquitting accused-appellant on reasonable doubt; and (2) the lower court gravely erred in holding that a
conspiracy exists between accused-appellant and her co-accused.

The Courts Ruling

The appeal is without merit.

In her defense, accused-appellant claims that she was an ordinary employee of Middle East International
Manpower Resources, Inc., where her other co-accused were the owners and managers. She also denies
receiving payment from the complainants; that had she promised employment in Taiwan, this promise
was made in the performance of her duties as a clerk in the company. She denies too having knowledge of
the criminal intent of her co-accused, adding that she might even be regarded as a victim in the present
case, as she was in good faith when she made the promise.

Art. 13(b) of the Labor Code reads:

Recruitment and placement refers to any act of canvassing, enlisting, contracting,

transporting, utilizing, hiring or procuring workers, and includes referrals, contract
services, promising or advertising for employment, locally or abroad, whether for profit
or not: Provided, That any person or entity which, in any manner, offers or promises for a
fee employment to two or more persons shall be deemed engaged in recruitment and
placement.
Art. 38(a) and (b) of the Labor Code reads as follows:

(a) Any recruitment activities, including the prohibited practices enumerated under
Article 34 of this Code, to be undertaken by non-licensees or non-holders of
authority shall be deemed illegal and punishable under Article 39 of this Code. x x
x

(b) Illegal recruitment when committed by a syndicate or in large scale shall be

considered an offense involving economic sabotage and shall be penalized in
accordance with Article 39 hereof.
 Illegal recruitment is deemed committed by a syndicate if carried out by a group
of three (3) or more persons conspiring and/or confederating with one another in
carrying out any unlawful or illegal transaction, enterprise or scheme defined
under the first paragraph hereof. Illegal recruitment is deemed committed in large
scale if committed against three (3) or more persons individually or as a group.

Art. 39(a) provides that the penalty of life imprisonment and a fine of PhP 100,000 shall be
imposed if illegal recruitment constitutes economic sabotage as defined above.

The claim of accused-appellant that she was a mere employee of her other co-accused does not
relieve her of liability. An employee of a company or corporation engaged in illegal recruitment may be
held liable as principal, together with his employer, if it is shown that the employee actively and
consciously participated in illegal recruitment.[6] As testified to by the complainants, accused-appellant
was among those who met and transacted with them regarding the job placement offers. In some
instances, she made the effort to go to their houses to recruit them. She even gave assurances that they
would be able to find employment abroad and leave for Taiwan after the filing of their
applications. Accused-appellant was clearly engaged in recruitment activities, notwithstanding her
gratuitous protestation that her actions were merely done in the course of her employment as a clerk.

Accused-appellant cannot claim to be merely following the dictates of her employers and use
good faith as a shield against criminal liability. As held in People v. Gutierrez:

Appellant cannot escape liability by claiming that she was not aware that before
working for her employer in the recruitment agency, she should first be registered with
the POEA. Illegal recruitment in large scale is malum prohibitum, not malum in se. Good
faith is not a defense.[7]

The claim of accused-appellant that she received no payment and that the payments were handed
directly over to her co-accused fails in the face of the testimony of the complainants that accused-
appellant was the one who received the money. In spite of the receipts having been issued by her co-
accused, the trial court found that payments were directly made to accused-appellant, and this finding was
upheld by the CA. Nothing is more entrenched than the rule that where, as here, the findings of fact of the
trial court are affirmed by the CA, these are final and conclusive upon this Court. [8] And even if it were
true that no money changed hands, money is not material to a prosecution for illegal recruitment, as the
definition of recruitment and placement in the Labor Code includes the phrase, whether for profit or
not. We held in People v. Jamilosa that it was sufficient that the accused promises or offers for a fee
employment to warrant conviction for illegal recruitment.[9] Accused-appellant made representations that
complainants would receive employment abroad, and this suffices for her conviction, even if her name
does not appear on the receipts issued to complainants as evidence that payment was made.

Neither accused-appellant nor her co-accused had authority to recruit workers for overseas
employment. The Philippine Overseas Employment Administration (POEA), through its employee,
Corazon Aquino, issued on July 8, 1997 the following certification to that effect:
This is to certify that per available records of this Office, MIDDLE EAST
INTERNATIONAL MANPOWER RESOURCES INC., with office address at 2119 P.
Burgos St., cor. Gil Puyat Ave., Pasay City represented by SAPHIA CALAMATA
ASAAD is a licensed landbased agency whose license expired on October 13, 1996. Per
record, said agency has not filed any application for renewal of license.

Per available records, the names of RODANTE IMPERIAL a.k.a. ROMEO

MARQUEZ, TERESITA IMPERIAL a.k.a. TERESITA MARQUEZ, ROMMEL
MARQUEZ a.k.a. ROMMEL IMPERIAL and LOURDES VALENCIANO do not appear
on the list of employees submitted by agency.

This certification is being issued for whatever legal purpose it may serve.[10]

Another certification dated July 9, 1997 stated that accused-appellant in her personal capacity was
not licensed or authorized to recruit workers for overseas employment and that any recruitment activities
undertaken by her are illegal.[11] Accused-appellant could thus point to no authority allowing her to recruit
complainants, as she was not an employee of Middle East International Manpower Resources, Inc. nor
was she allowed to do so in her personal capacity. Furthermore, she undertook recruitment activities
outside the premises of the office of a licensed recruitment agency, which can only be done with the prior
approval of the POEA, and neither she nor her co-accused had permission to do so, as testified by Aquino
of the POEA.[12]

Accused-appellant was convicted of Illegal Recruitment in Large Scale, and there could be no
other result. As held in Jamilosa:
To prove illegal recruitment in large scale, the prosecution is burdened to prove three (3)
essential elements, to wit: (1) the person charged undertook a recruitment activity under
Article 13(b) or any prohibited practice under Article 34 of the Labor Code; (2) accused
did not have the license or the authority to lawfully engage in the recruitment and
placement of workers; and (3) accused committed the same against three or more persons
individually or as a group.[13]x x x
 The RTC found accused-appellant to have undertaken recruitment activities, and this was
affirmed by the CA. A POEA certification was submitted stating that accused-appellant was not
authorized to recruit applicants for overseas employment, and she did not contest this certification. In the
present case, there are four complainants: De Luna, De Villa, Dela Cuesta, and Candelaria. The three
essential elements for illegal recruitment in large scale are present. Thus, there can be no other conclusion
in this case but to uphold the conviction of accused-appellant and apply the penalty as imposed by law.

WHEREFORE, premises considered, we AFFIRM the appealed CA Decision dated July 24,
2007 in CA-G.R. CR-H.C. No. 01390, with no costs.
SO ORDERED.
 THIRD DIVISION

BECMEN SERVICE EXPORTER G.R. Nos. 182978-79

AND PROMOTION, INC.,
Petitioner, Present:
Ynares-Santiago, J.(Chairperson),
- versus - Carpio Morales,*

Chico-Nazario,

Nachura, and

Peralta, JJ.

SPOUSES SIMPLICIO and MILA

CUARESMA (for and in behalf of

their daughter, Jasmin G. Cuaresma),

WHITE FALCON SERVICES, INC.

and JAIME ORTIZ (President,

White Falcon Services, Inc.),

Respondents.

x ------------------------------------------------------ x

SPOUSES SIMPLICIO and MILA G.R. Nos. 184298-99

CUARESMA (for and in behalf of

their daughter, Jasmin G. Cuaresma),

Petitioners,

- versus -

WHITE FALCON SERVICES, INC. Promulgated:

and BECMEN SERVICE EXPORTER

AND PROMOTION, INC.,

Respondents. April 7, 2009

x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

These consolidated petitions assail the Amended Decision[1] of the Court of Appeals dated May
14, 2008 in CA-G.R. SP No. 80619 and CA-G.R. SP No. 81030 finding White Falcon Services, Inc. and
Becmen Service Exporter and Promotion, Inc. solidarily liable to indemnify spouses Simplicio and Mila
Cuaresma the amount of US$4,686.73 in actual damages with interest.

On January 6, 1997, Jasmin Cuaresma (Jasmin) was deployed by Becmen Service Exporter and
Promotion, Inc.[2] (Becmen) to serve as assistant nurse in Al-Birk Hospital in the Kingdom of Saudi
Arabia (KSA), for a contract duration of three years, with a corresponding salary of US$247.00 per
month.

Over a year later, she died allegedly of poisoning.

Jessie Fajardo, a co-worker of Jasmin, narrated that on June 21, 1998, Jasmin was found dead by
a female cleaner lying on the floor inside her dormitory room with her mouth foaming and smelling of
poison.[3]

Based on the police report and the medical report of the examining physician of the Al-Birk
Hospital, who conducted an autopsy of Jasmins body, the likely cause of her death was poisoning. Thus:
 According to letter No. 199, dated 27.2.1419H, issued by Al-Birk Police Station,
for examining the corpse of Jasmin Cuaresma, 12.20 P.M. 27.2.1419H, Sunday, at Al-
Birk Hospital.

1. The Police Report on the Death

2. The Medical Diagnosis

Sex: Female Age: 25 years Relg: Christian

The said person was brought to the Emergency Room of the hospital; time 12.20
P.M. and she was unconscious, blue, no pulse, no respiration and the first aid esd
undertaken but without success.

3. Diagnosis and Opinion: Halt in blood circulation respiratory system and brain
damage due to an apparent poisoning which is under investigation.[4]

Name: Jasmin Cuaresma

Sex: Female

Marital Status: Single Nationality: Philipino (sic)

Religion: Christian Profession: Nurse

Address: Al-Birk Genrl. Hospital Birth Place: The Philippines

On 27.2.1419H, Dr. Tariq Abdulminnem and Dr. Ashoki Komar, both have
examined the dead body of Jasmin Cuaresma, at 12.20 P.M., Sunday,
22.2.14189H, and the result was:

1. Report of the Police on the death

2. Medical Examination: Blue skin and paleness on the Extrimes (sic), total halt
to blood circulation and respiratory system and brain damage. There were no
 external injuries. Likely poisoning by taking poisonous substance, yet not
determined. There was a bad smell in the mouth and unknown to
us.[5] (Emphasis supplied)

Jasmins body was repatriated to Manila on September 3, 1998. The following day, the City
Health Officer of Cabanatuan City conducted an autopsy and the resulting medical report indicated that
Jasmin died under violent circumstances, and not poisoning as originally found by the KSA examining
physician. The City Health Officer found that Jasmin had abrasions at her inner lip and gums; lacerated
wounds and abrasions on her left and right ears; lacerated wounds and hematoma (contusions) on her
elbows; abrasions and hematoma on her thigh and legs; intra-muscular hemorrhage at the anterior chest;
rib fracture; puncture wounds; and abrasions on the labia minora of the vaginal area.[6]

On March 11, 1999, Jasmins remains were exhumed and examined by the National Bureau of
Investigation (NBI). The toxicology report of the NBI, however, tested negative for non-volatile, metallic
poison and insecticides.[7]

Simplicio and Mila Cuaresma (the Cuaresmas), Jasmins parents and her surviving heirs, received
from the Overseas Workers Welfare Administration (OWWA) the following amounts: P50,000.00 for
death benefits; P50,000.00 for loss of life; P20,000.00 for funeral expenses; and P10,000.00 for medical
reimbursement.

On November 22, 1999, the Cuaresmas filed a complaint against Becmen and its principal in the
KSA, Rajab & Silsilah Company (Rajab), claiming death and insurance benefits, as well as moral and
exemplary damages for Jasmins death.[8]

In their complaint, the Cuaresmas claim that Jasmins death was work-related, having occurred at
the employers premises;[9] that under Jasmins contract with Becmen, she is entitled to iqama insurance
coverage; that Jasmin is entitled to compensatory damages in the amount of US$103,740.00, which is the
sum total of her monthly salary of US$247.00 per month under her employment contract, multiplied by
35 years (or the remaining years of her productive life had death not supervened at age 25, assuming that
she lived and would have retired at age 60).
 The Cuaresmas assert that as a result of Jasmins death under mysterious circumstances, they
suffered sleepless nights and mental anguish. The situation, they claim, was aggravated by findings in the
autopsy and exhumation reports which evidently show that a grave injustice has been committed against
them and their daughter, for which those responsible should likewise be made to pay moral and
exemplary damages and attorneys fees.

In their position paper, Becmen and Rajab insist that Jasmin committed suicide, citing a prior
unsuccessful suicide attempt sometime in March or April 1998 and relying on the medical report of the
examining physician of the Al-Birk Hospital. They likewise deny liability because the Cuaresmas already
recovered death and other benefits totaling P130,000.00 from the OWWA. They insist that the Cuaresmas
are not entitled to iqama insurance because this refers to the issuance not insurance of iqama, or
residency/work permit required in the KSA. On the issue of moral and exemplary damages, they claim
that the Cuaresmas are not entitled to the same because they have not acted with fraud, nor have they been
in bad faith in handling Jasmins case.

While the case was pending, Becmen filed a manifestation and motion for substitution alleging
that Rajab terminated their agency relationship and had appointed White Falcon Services, Inc. (White
Falcon) as its new recruitment agent in the Philippines. Thus, White Falcon was impleaded as respondent
as well, and it adopted and reiterated Becmens arguments in the position paper it subsequently filed.

On February 28, 2001, the Labor Arbiter rendered a Decision[10] dismissing the complaint for lack
of merit. Giving weight to the medical report of the Al-Birk Hospital finding that Jasmin died of
poisoning, the Labor Arbiter concluded that Jasmin committed suicide. In any case, Jasmins death was
not service-connected, nor was it shown that it occurred while she was on duty; besides, her parents have
received all corresponding benefits they were entitled to under the law. In regard to damages, the Labor
Arbiter found no legal basis to warrant a grant thereof.

On appeal, the National Labor Relations Commission (Commission) reversed the decision of the
Labor Arbiter. Relying on the findings of the City Health Officer of Cabanatuan City and the NBI as
contained in their autopsy and toxicology report, respectively, the Commission, via its November 22,
2002 Resolution[11] declared that, based on substantial evidence adduced, Jasmin was the victim of
compensable work-connected criminal aggression. It disregarded the Al-Birk Hospital attending
physicians report as well as the KSA police report, finding the same to be inconclusive. It declared that
Jasmins death was the result of an accident occurring within the employers premises that is attributable to
her employment, or to the conditions under which she lived, and thus arose out of and in the course of her
employment as nurse. Thus, the Cuaresmas are entitled to actual damages in the form of Jasmins lost
earnings, including future earnings, in the total amount of US$113,000.00. The Commission, however,
dismissed all other claims in the complaint.

Becmen, Rajab and White Falcon moved for reconsideration, whereupon the Commission issued
its October 9, 2003 Resolution[12]reducing the award of US$113,000.00 as actual damages to
US$80,000.00.[13] The NLRC likewise declared Becmen and White Falcon as solidarily liable for
payment of the award.

Becmen and White Falcon brought separate petitions for certiorari to the Court of Appeals.[14] On
June 28, 2006, the appellate court rendered its Decision,[15] the dispositive portion of which reads, as
follows:

WHEREFORE, the subject petitions are DENIED but in the execution of the
decision, it should first be enforced against White Falcon Services and then against
Becmen Services when it is already impossible, impractical and futile to go against it
(White Falcon).

SO ORDERED.[16]

The appellate court affirmed the NLRCs findings that Jasmins death was compensable, the same
having occurred at the dormitory, which was contractually provided by the employer. Thus her death
should be considered to have occurred within the employers premises, arising out of and in the course of
her employment.
 Becmen and White Falcon moved for reconsideration. On May 14, 2008, the appellate court
rendered the assailed Amended Decision, the dispositive portion of which reads, as follows:

WHEREFORE, the motions for reconsideration are GRANTED. Accordingly,

the award of US$80,000.00 in actual damages is hereby reduced to US$4,686.73 plus
interest at the legal rate computed from the time it became due until fully paid. Petitioners
are hereby adjudged jointly and solidarily liable with the employer for the monetary
awards with Becmen Service Exporter and Promotions, Inc. having a right of
reimbursement from White Falcon Services, Inc.

SO ORDERED.[17]

In the Amended Decision, the Court of Appeals found that although Jasmins death was
compensable, however, there is no evidentiary basis to support an award of actual damages in the amount
of US$80,000.00. Nor may lost earnings be collected, because the same may be charged only against the
perpetrator of the crime or quasi-delict. Instead, the appellate court held that Jasmins beneficiaries should
be entitled only to the sum equivalent of the remainder of her 36-month employment contract, or her
monthly salary of US$247.00 multiplied by nineteen (19) months, with legal interest.

Becmen filed the instant petition for review on certiorari (G.R. Nos. 182978-79). The Cuaresmas,
on the other hand, moved for a reconsideration of the amended decision, but it was denied. They are now
before us via G.R. Nos. 184298-99.

On October 6, 2008, the Court resolved to consolidate G.R. Nos. 184298-99 with G.R. Nos.
182978-79.

In G.R. Nos. 182978-79, Becmen raises the following issues for our resolution:

(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT GAVE MORE

CREDENCE AND WEIGHT TO THE AUTOPSY REPORT CONDUCTED BY THE
CABANATUAN CITY HEALTH OFFICE THAN THE MEDICAL AND POLICE
REPORTS ISSUED BY THE MINISTRY OF HEALTH OF KINGDOM OF SAUDI
ARABIA AND AL-BIRK HOSPITAL.

(THE COURT OF APPEALS) GRAVELY ERRED WHEN ON THE BASIS OF

THE POSITION PAPERS AND ANNEXES THERETO INCLUDING THE AUTOPSY
REPORT, IT CONCLUDED THAT THE DEATH OF JASMIN CUARESMA WAS
CAUSED BY CRIMINAL AGGRESSION.

(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT HELD THAT

THE DEATH OF JASMIN CUARESMA WAS COMPENSABLE PURSUANT TO
THE RULING OF THE SUPREME COURT IN TALLER VS. YNCHAUSTI, G.R. NO.
35741, DECEMBER 20, 1932, WHICH IT FOUND TO BE STILL GOOD LAW.

(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT HELD BECMEN

LIABLE FOR THE DEATH OF JASMIN CUARESMA NOTWITHSTANDING ITS
ADMISSIONS THAT IQAMA INSURANCE WAS A TYPOGRAPHICAL ERROR
SINCE IQAMA IS NOT AN INSURANCE.

(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT CONCLUDED

THAT THE DEATH OF JASMIN WAS WORK RELATED.

(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT HELD BECMEN

LIABLE TO JASMINS BENEFICIARIES FOR THE REMAINDER OF HER 36-
MONTH CONTRACT COMPUTED IN THIS MANNER: MONTHLY SALARY OF
US$246.67 MULTIPLIED BY 19 MONTHS, THE REMAINDER OF THE TERM OF
JASMINS EMPLOYMENT CONTRACT, IS EQUAL TO US$4,686.73.

(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT HELD BECMEN

LIABLE TO PAY INTEREST AT THE LEGAL RATE FROM THE TIME IT WAS
DUE UNTIL FULLY PAID.

(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT HELD BECMEN

AND WHITE FALCON JOINTLY AND SEVERALLY LIABLE WITH THE
 EMPLOYER NOTWITHSTANDING THE ASSUMPTION OF LIABILITY
EXECUTED BY WHITE FALCON IN FAVOR OF BECMEN.

On the other hand, in G.R. Nos. 184298-99, the Cuaresmas raise the following issues:

(THE COURT OF APPEALS) GRAVELY ERRED IN APPLYING THE

PROVISIONS OF THE CIVIL CODE CONSIDERED GENERAL LAW DESPITE THE
CASE BEING COVERED BY E.O. 247, R.A. 8042 AND LABOR CODE
CONSIDERED AS SPECIAL LAWS.

(THE COURT OF APPEALS) GRAVELY ERRED IN NOT APPLYING THE

DECEASEDS FUTURE EARNINGS WHICH IS (AN) INHERENT FACTOR IN THE
COMPUTATION OF DEATH BENEFITS OF OVERSEAS FILIPINO CONTRACT
WORKERS.

(THE COURT OF APPEALS) GRAVELY ERRED IN REDUCING THE

DEATH BENEFITS AWARDED BY NLRC CONSIDERED FINDINGS OF FACT
THAT CANNOT BE DISTURBED THROUGH CERTIORARI UNDER RULE 65 OF
THE RULES OF COURT.

The issue for resolution is whether the Cuaresmas are entitled to monetary claims, by way of
benefits and damages, for the death of their daughter Jasmin.

The terms and conditions of Jasmins 1996 Employment Agreement which she and her employer
Rajab freely entered into constitute the law between them. As a rule, stipulations in an employment
contract not contrary to statutes, public policy, public order or morals have the force of law between the
contracting parties.[18] An examination of said employment agreement shows that it provides for no other
monetary or other benefits/privileges than the following:

1. 1,300 rials (or US$247.00) monthly salary;

 2. Free air tickets to KSA at the start of her contract and to the Philippines at
the end thereof, as well as for her vacation at the end of each twenty four-month
service;

3. Transportation to and from work;

4. Free living accommodations;

5. Free medical treatment, except for optical and dental operations, plastic
surgery charges and lenses, and medical treatment obtained outside of KSA;

6. Entry visa fees will be shared equally between her and her employer, but the
exit/re-entry visa fees, fees for Iqama issuance, renewal, replacement, passport
renewal, sponsorship transfer and other liabilities shall be borne by her;

7. Thirty days paid vacation leave with round trip tickets to Manila after
twenty four-months of continuous service;

8. Eight days public holidays per year;

9. The indemnity benefit due her at the end of her service will be calculated as
per labor laws of KSA.

Thus, the agreement does not include provisions for insurance, or for accident, death or other
benefits that the Cuaresmas seek to recover, and which the labor tribunals and appellate court granted
variably in the guise of compensatory damages.

However, the absence of provisions for social security and other benefits does not make Jasmins
employment contract infirm. Under KSA law, her foreign employer is not obliged to provide her these
benefits; and neither is Jasmin entitled to minimum wage unless of course the KSA labor laws have been
amended to the opposite effect, or that a bilateral wage agreement has been entered into.

Our next inquiry is, should Jasmins death be considered as work-connected and thus
compensable? The evidence indicates that it is not. At the time of her death, she was not on duty, or else
evidence to the contrary would have been adduced. Neither was she within hospital premises at the time.
Instead, she was at her dormitory room on personal time when she died. Neither has it been shown, nor
does the evidence suggest, that at the time she died, Jasmin was performing an act reasonably necessary
or incidental to her employment as nurse, because she was at her dormitory room. It is reasonable to
suppose that all her work is performed at the Al-birk Hospital, and not at her dormitory room.

We cannot expect that the foreign employer should ensure her safety even while she is not on
duty. It is not fair to require employers to answer even for their employees personal time away from work,
which the latter are free to spend of their own choosing. Whether they choose to spend their free time in
the pursuit of safe or perilous undertakings, in the company of friends or strangers, lovers or enemies, this
is not one area which their employers should be made accountable for. While we have emphasized the
need to observe official work time strictly,[19] what an employee does on free time is beyond the
employers sphere of inquiry.

While the employers premises may be defined very broadly not only to include premises owned
by it, but also premises it leases, hires, supplies or uses,[20] we are not prepared to rule that the dormitory
wherein Jasmin stayed should constitute employers premises as would allow a finding that death or injury
therein is considered to have been incurred or sustained in the course of or arose out of her
employment. There are certainly exceptions,[21] but they do not appear to apply here. Moreover, a
complete determination would have to depend on the unique circumstances obtaining and the overall
factual environment of the case, which are here lacking.

But, did Jasmin commit suicide? Rajab, Becmen and White Falcon vehemently insist that she did;
thus, her heirs may not claim benefits or damages based on criminal aggression. On the other hand, the
Cuaresmas do not believe so.
 The Court cannot subscribe to the idea that Jasmin committed suicide while halfway into her
employment contract. It is beyond human comprehension that a 25-year old Filipina, in the prime of her
life and working abroad with a chance at making a decent living with a high-paying job which she could
not find in her own country, would simply commit suicide for no compelling reason.

The Saudi police and autopsy reports which state that Jasmin is a likely/or apparent victim of
poisoning are patently inconclusive. They are thus unreliable as evidence.

On the contrary, the autopsy report of the Cabanatuan City Health Officer and the exhumation
report of the NBI categorically and unqualifiedly show that Jasmin sustained external and internal
injuries, specifically abrasions at her inner lip and gums; lacerated wounds and abrasions on her left
and right ears; lacerated wounds and hematoma (contusions) on her elbows; abrasions and
hematoma on her thigh and legs; intra-muscular hemorrhage at the anterior chest; a fractured
rib; puncture wounds; and abrasions on the labia minora of the vaginal area. The NBI toxicology
report came up negative on the presence of poison.

All these show that Jasmin was manhandled and possibly raped prior to her death.

Even if we were to agree with the Saudi police and autopsy reports that indicate Jasmin was
poisoned to death, we do not believe that it was self-induced. If ever Jasmin was poisoned, the assailants
who beat her up and possibly raped her are certainly responsible therefor.

We are not exactly ignorant of what goes on with our OFWs. Nor is the rest of the world blind to
the realities of life being suffered by migrant workers in the hands of some foreign employers. It is
inconceivable that our Filipina women would seek employment abroad and face uncertainty in a foreign
land, only to commit suicide for unexplained reasons. Deciding to leave their family, loved ones, and the
comfort and safety of home, to work in a strange land requires unrivaled strength and courage. Indeed,
many of our women OFWs who are unfortunate to end up with undesirable employers have been there
more times than they care to, beaten up and broken in body yet they have remained strong in mind,
refusing to give up the will to live. Raped, burned with cigarettes, kicked in the chest with sharp high-
heeled shoes, starved for days or even weeks, stabbed, slaved with incessant work, locked in their rooms,
forced to serve their masters naked, grossly debased, dehumanized and insulted, their spirits fought on
and they lived for the day that they would once again be reunited with their families and loved ones. Their
bodies surrendered, but their will to survive remained strong.

It is surprising, therefore, that Rajab, Becmen and White Falcon should insist on suicide, without
even lifting a finger to help solve the mystery of Jasmins death. Being in the business of sending OFWs to
work abroad, Becmen and White Falcon should know what happens to some of our OFWs. It is
impossible for them to be completely unaware that cruelties and inhumanities are inflicted on OFWs who
are unfortunate to be employed by vicious employers, or upon those who work in communities or
environments where they are liable to become victims of crime. By now they should know that our
women OFWs do not readily succumb to the temptation of killing themselves even when assaulted,
abused, starved, debased and, worst, raped.

Indeed, what we have seen is Rajab and Becmens revolting scheme of conveniently avoiding
responsibility by clinging to the absurd theory that Jasmin took her own life. Abandoning their legal,
moral and social obligation (as employer and recruiter) to assist Jasmins family in obtaining justice for
her death, they immediately gave up on Jasmins case, which has remained under investigation as the
autopsy and police reports themselves indicate. Instead of taking the cudgels for Jasmin, who had no
relative or representative in the KSA who would naturally demand and seek an investigation of her case,
Rajab and Becmen chose to take the most convenient route to avoiding and denying liability, by casting
Jasmins fate to oblivion. It appears from the record that to this date, no follow up of Jasmins case was
ever made at all by them, and they seem to have expediently treated Jasmins death as a closed
case. Despite being given the lead via the autopsy and toxicology reports of the Philippine authorities,
they failed and refused to act and pursue justice for Jasmins sake and to restore honor to her name.

Indeed, their nonchalant and uncaring attitude may be seen from how Jasmins remains were
repatriated. No official representative from Rajab or Becmen was kind enough to make personal
representations with Jasmins parents, if only to extend their condolences or sympathies; instead, a mere
colleague, nurse Jessie Fajardo, was designated to accompany Jasmins body home.
 Of all lifes tragedies, the death of ones own child must be the most painful for a parent. Not
knowing why or how Jasmins life was snuffed out makes the pain doubly unbearable for Jasmins parents,
and further aggravated by Rajab, Becmen, and White Falcons baseless insistence and accusation that it
was a self-inflicted death, a mortal sin by any religious standard.

Thus we categorically hold, based on the evidence; the actual experiences of our OFWs; and the
resilient and courageous spirit of the Filipina that transcends the vilest desecration of her physical self,
that Jasmin did not commit suicide but a victim of murderous aggression.

Rajab, Becmen, and White Falcons indifference to Jasmins case has caused unfathomable pain
and suffering upon her parents. They have turned away from their moral obligation, as employer and
recruiter and as entities laden with social and civic obligations in society, to pursue justice for and in
behalf of Jasmin, her parents and those she left behind. Possessed with the resources to determine the
truth and to pursue justice, they chose to stand idly for the sake of convenience and in order that they may
avoid pecuniary liability, turning a blind eye to the Philippine authorities autopsy and toxicology reports
instead of taking action upon them as leads in pursuing justice for Jasmins death. They have placed their
own financial and corporate interests above their moral and social obligations, and chose to secure and
insulate themselves from the perceived responsibility of having to answer for and indemnify Jasmins heirs
for her death.

Under Republic Act No. 8042 (R.A. 8042), or the Migrant Workers and Overseas Filipinos Act of
1995,[22] the State shall, at all times, uphold the dignity of its citizens whether in country or overseas, in
general, and Filipino migrant workers, in particular.[23] The State shall provide adequate and timely social,
economic and legal services to Filipino migrant workers.[24] The rights and interest
[25]
of distressed overseas Filipinos, in general, and Filipino migrant workers, in particular, documented or
undocumented, are adequately protected and safeguarded.[26]

Becmen and White Falcon, as licensed local recruitment agencies, miserably failed to abide by
the provisions of R.A. 8042. Recruitment agencies are expected to extend assistance to their deployed
OFWs, especially those in distress. Instead, they abandoned Jasmins case and allowed it to remain
unsolved to further their interests and avoid anticipated liability which parents or relatives of Jasmin
would certainly exact from them. They willfully refused to protect and tend to the welfare of the deceased
Jasmin, treating her case as just one of those unsolved crimes that is not worth wasting their time and
resources on. The evidence does not even show that Becmen and Rajab lifted a finger to provide legal
representation and seek an investigation of Jasmins case. Worst of all, they unnecessarily trampled upon
the person and dignity of Jasmin by standing pat on the argument that Jasmin committed suicide, which is
a grave accusation given its un-Christian nature.

We cannot reasonably expect that Jasmins parents should be the ones to actively pursue a just
resolution of her case in the KSA, unless they are provided with the finances to undertake this herculean
task. Sadly, Becmen and Rajab did not lend any assistance at all in this respect. The most Jasmins parents
can do is to coordinate with Philippine authorities as mandated under R.A. 8042, obtain free legal
assistance and secure the aid of the Department of Foreign Affairs, the Department of Labor and
Employment, the POEA and the OWWA in trying to solve the case or obtain relief, in accordance with
Section 23[27] of R.A. 8042. To our mind, the Cuaresmas did all that was within their power, short of
actually flying to the KSA. Indeed, the Cuaresmas went even further. To the best of their abilities and
capacities, they ventured to investigate Jasmins case on their own: they caused another autopsy on
Jasmins remains as soon as it arrived to inquire into the true cause of her death. Beyond that, they
subjected themselves to the painful and distressful experience of exhuming Jasmins remains in order to
obtain another autopsy for the sole purpose of determining whether or not their daughter was
poisoned. Their quest for the truth and justice is equally to be expected of all loving parents. All this time,
Rajab and Becmen instead of extending their full cooperation to the Cuaresma family merely sat on their
laurels in seeming unconcern.

In Interorient Maritime Enterprises, Inc. v. NLRC,[28] a seaman who was being repatriated after
his employment contract expired, failed to make his Bangkok to Manila connecting flight as he began to
wander the streets of Bangkok aimlessly. He was shot to death by Thai police four days after, on account
of running amuck with a knife in hand and threatening to harm anybody within sight. The employer, sued
for death and other benefits as well as damages, interposed as defense the provision in the seafarer
agreement which provides that no compensation shall be payable in respect of any injury, incapacity,
disability or death resulting from a willful act on his own life by the seaman. The Court rejected the
defense on the view, among others, that the recruitment agency should have observed some precautionary
measures and should not have allowed the seaman, who was later on found to be mentally ill, to travel
home alone, and its failure to do so rendered it liable for the seamans death. We ruled therein that
 The foreign employer may not have been obligated by its contract to provide a
companion for a returning employee, but it cannot deny that it was expressly tasked by its
agreement to assure the safe return of said worker. The uncaring attitude displayed by
petitioners who, knowing fully well that its employee had been suffering from some
mental disorder, nevertheless still allowed him to travel home alone, is appalling to
say the least. Such attitude harks back to another time when the landed gentry
practically owned the serfs, and disposed of them when the latter had grown old,
sick or otherwise lost their usefulness.[29] (Emphasis supplied)

Thus, more than just recruiting and deploying OFWs to their foreign principals, recruitment
agencies have equally significant responsibilities. In a foreign land where OFWs are likely to encounter
uneven if not discriminatory treatment from the foreign government, and certainly a delayed access to
language interpretation, legal aid, and the Philippine consulate, the recruitment agencies should be
the first to come to the rescue of our distressed OFWs since they know the employers and the addresses
where they are deployed or stationed. Upon them lies the primary obligation to protect the rights and
ensure the welfare of our OFWs, whether distressed or not. Who else is in a better position, if not these
recruitment agencies, to render immediate aid to their deployed OFWs abroad?

Article 19 of the Civil Code provides that every person must, in the exercise of his rights and in
the performance of his duties, act with justice, give everyone his due, and observe honesty and good
faith. Article 21 of the Code states that any person who wilfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall compensate the latter for the
damage. And, lastly, Article 24 requires that in all contractual, property or other relations, when one of
the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental
weakness, tender age or other handicap, the courts must be vigilant for his protection.

Clearly, Rajab, Becmen and White Falcons acts and omissions are against public policy because
they undermine and subvert the interest and general welfare of our OFWs abroad, who are entitled to full
protection under the law. They set an awful example of how foreign employers and recruitment agencies
should treat and act with respect to their distressed employees and workers abroad. Their shabby and
callous treatment of Jasmins case; their uncaring attitude; their unjustified failure and refusal to assist in
the determination of the true circumstances surrounding her mysterious death, and instead finding
satisfaction in the unreasonable insistence that she committed suicide just so they can conveniently avoid
pecuniary liability; placing their own corporate interests above of the welfare of their employees all these
are contrary to morals, good customs and public policy, and constitute taking advantage of the poor
employee and her familys ignorance, helplessness, indigence and lack of power and resources to seek the
truth and obtain justice for the death of a loved one.

Giving in handily to the idea that Jasmin committed suicide, and adamantly insisting on it just to
protect Rajab and Becmens material interest despite evidence to the contrary is against the moral law and
runs contrary to the good custom of not denouncing ones fellowmen for alleged grave wrongdoings that
undermine their good name and honor.[30]

Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of
Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This
pronouncement is in keeping with the basic public policy of the State to afford protection to labor,
promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate
the relations between workers and employers. This ruling is likewise rendered imperative by Article 17 of
the Civil Code which states that laws which have for their object public order, public policy and good
customs shall not be rendered ineffective by laws or judgments promulgated, or by determinations or
conventions agreed upon in a foreign country.[31]

The relations between capital and labor are so impressed with public interest, [32] and neither shall
act oppressively against the other, or impair the interest or convenience of the public.[33] In case of doubt,
all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for
the laborer.[34]

The grant of moral damages to the employee by reason of misconduct on the part of the employer
is sanctioned by Article 2219 (10)[35] of the Civil Code, which allows recovery of such damages in actions
referred to in Article 21.[36]
 Thus, in view of the foregoing, the Court holds that the Cuaresmas are entitled to moral damages,
which Becmen and White Falcon are jointly and solidarily liable to pay, together with exemplary
damages for wanton and oppressive behavior, and by way of example for the public good.

Private employment agencies are held jointly and severally liable with the foreign-based
employer for any violation of the recruitment agreement or contract of employment. This joint and
solidary liability imposed by law against recruitment agencies and foreign employers is meant to assure
the aggrieved worker of immediate and sufficient payment of what is due him. [37] If the
recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the
case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the
aforesaid claims and damages.[38]

White Falcons assumption of Becmens liability does not automatically result in Becmens freedom
or release from liability. This has been ruled in ABD Overseas Manpower Corporation v.
NLRC.[39] Instead, both Becmen and White Falcon should be held liable solidarily, without prejudice to
each having the right to be reimbursed under the provision of the Civil Code that whoever pays for
another may demand from the debtor what he has paid.[40]

WHEREFORE, the Amended Decision of the Court of Appeals dated May 14, 2008 in CA-G.R.
SP No. 80619 and CA-G.R. SP No. 81030 is SET ASIDE. Rajab & Silsilah Company, White Falcon
Services, Inc., Becmen Service Exporter and Promotion, Inc., and their corporate directors and
officers are found jointly and solidarily liable and ORDERED to indemnify the heirs of Jasmin
Cuaresma, spouses Simplicio and Mila Cuaresma, the following amounts:

1) TWO MILLION FIVE HUNDRED THOUSAND PESOS (P2,500,000.00) as moral damages;

2) TWO MILLION FIVE HUNDRED THOUSAND PESOS (P2,500,000.00) as exemplary

damages;
3) Attorneys fees equivalent to ten percent (10%) of the total monetary award; and,

4) Costs of suit.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 168651 March 16, 2011

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.
EDITH RAMOS ABAT, Accused-Appellant.

RESOLUTION

BERSAMIN, J.:

Faced with the real prospect of spending the remainder of her natural life behind bars, the accused appeals
the decision promulgated on April 29, 2005,1 whereby the Court of Appeals (CA) affirmed her conviction
beyond reasonable doubt of the crime of large scale illegal recruitment as defined by Article 13(b) and
penalized by Article 39(a), both of the Labor Code, handed down by the Regional Trial Court (RTC),
Branch 42, in Dagupan City, sentencing her to suffer life imprisonment and to pay a fine of P100,000.00,
and ordering her to reimburse to the four complainants the respective amounts they had paid to the
accused on their recruitment.2

The accused was arraigned and tried under the information dated March 5, 2001, which alleged:

That sometime in the months of November and December 2000 in the Municipality of Calasiao, Province
of Pangasinan, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused
not being a licensee or holder of authority, did then and there, willfully (sic), unlawfully and feloniously
undertake and perform recruitment activities in large scale by recruiting MARIA CORAZON AGAS
GARCIA, JOCELYN GEMINIANO FLORES, SONNY YABOT y ANTONIO, BALTAZAR ARGEL y
VALLEDOR, LETECIA RINONOS MARCELO, PABLITO S. GALUMAN, TARCILA M. UMAGAT,
CAROLINE U. CALIX, PERCY C. FUERTES, to a supposed job abroad, particularly in Taiwan, for a
fee, without first securing the necessary license or permit to do the same.

CONTRARY TO PD 442 as amended by PD 2018.

In her appeal, the accused denies having any participation in the recruitment of the nine named
complainants for employment in Taiwan, asserting that the CA erred in thus affirming her conviction
despite the totality of evidence pointing to no other conclusion than her innocence. She urges the review
of the CAs ruling on the credibility of the witnesses in view of the two opposing versions of the facts
involved.

In support of her appeal, she argues that the sums she exacted and received from the complainants
represented only the reimbursement of the expenses incurred during her trips upon the advice of Sister
Araceli, a faith healer, that took her and the complainants to Cebu City, Iligan City, Ozamis City and
Cagayan de Oro City, not in consideration of the employment in Taiwan supposedly offered to the
complainants; that for her not to be reimbursed would be most unfair because she had defrayed the
expenses for the trips with the complainants with her husbands money; that the failure of the
complainants to produce receipts showing that she had collected money from them in connection with her
assurances of their employment in Taiwan was fatal to the States case against her; and that although only
four of the nine named complainants had appeared and testified in court, the Prosecution did not explain
why the five other complainants had desisted from testifying against her.

After having examined the records, however, we reject the accuseds denial of having any part in the
recruitment of the complainants and affirm the decision of the CA. We affirm her conviction,

Article 13(b) of the Labor Code, defines "recruitment and placement" as referring:

xxx to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers,
and includes referrals, contract services, promising or advertising for employment, locally or abroad,
whether for profit or not; Provided, That any person or entity which, in any manner, offers or promises for
a fee employment to two or more persons shall be deemed engaged in recruitment and placement.

Article 38 of the Labor Code specifically defines what activities or acts constitute illegal recruitment and
illegal recruitment by a syndicate or in large scale, viz:

Article 38. Illegal recruitment. - (a) Any recruitment activities, including the prohibited practices
enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority,
shall be deemed illegal and punishable under Article 39 of this Code. The Department of Labor and
Employment or any law enforcement officer may initiate complaints under this Article.

(b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense
involving economic sabotage and shall be penalized in accordance with Article 39 hereof.

Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more
persons conspiring and/or confederating with one another in carrying out any unlawful or illegal
transaction, enterprise or scheme defined under the first paragraph hereof. Illegal recruitment is deemed
committed in large scale if committed against three (3) or more persons individually or as a group.

(c) The Secretary of Labor and Employment or his duly authorized representatives shall have the power to
cause the arrest and detention of such non-licensee or non-holder of authority if after investigation it is
determined that his activities constitute a danger to national security and public order or will lead to
further exploitation of job-seekers. The Secretary shall order the search of the office or premises and
seizure of documents, paraphernalia, properties and other implements used in illegal recruitment activities
and the closure of companies, establishments and entities found to be engaged in the recruitment of
workers for overseas employment, without having been licensed or authorized to do so.

The acts committed by the accused constituted illegal recruitment in large scale, whose essential elements
are the following:

(a) The accused engages in acts of recruitment and placement of workers defined under Article
13(b) of the Labor Code or in any prohibited activities under Article 43 of the Labor Code;

(b) The accused has not complied with the guidelines issued by the Secretary of Labor and
Employment, particularly with respect to the securing of license or an authority to recruit and
deploy workers, either locally or overseas; and
 (c) The accused commits the unlawful acts against three or more persons individually or as a
group.3

It is the lack of the necessary license or authority to recruit and deploy workers, either locally or overseas,
that renders the recruitment activity unlawful or criminal.4 To prove illegal recruitment, therefore, the
State must show that the accused gave the complainants the distinct impression that she had the power or
ability to deploy the complainants abroad in a manner that they were convinced to part with their money
for that end.

In addition to her admission that she did not have any license or authority from the Department of Labor
and Employment (DOLE) to recruit and deploy workers, either locally or overseas, the explicit
certification issued on January 10, 2001 by Atty. Adonis Peralta, the DOLE District Officer in Dagupan
City, attesting that the accused did not possess any permit to recruit workers for overseas employment in
Pangasinan, including the cities of Dagupan, San Carlos, Urdaneta and Alaminos, confirmed her lack of
the license or authority required by law.5

Our review shows that the State competently established that the accused, despite having no license or
authority to recruit and deploy workers, either locally or overseas, had represented to the complainants
that she could secure their employment in Taiwan either as factory workers or as computer operators at a
monthly salary of NT$45,000.00 each; and that the complainants had relied on her representation and
given her the amounts she had demanded in the expectation of their placement. We note that in order to
make her representation more convincing, she had also told the complainants about her being related to
the Philippine Ambassador to Taiwan, as well as to President Ramos and President Estrada.

The accused admitted having received various sums of money from the complainants, who had given the
sums either in cash or by depositing in the bank account of her husband, but denied that such sums were
in consideration of their recruitment, claiming instead that the sums were reimbursements for the
expenses incurred during the trips to Cebu City, Iligan City, Ozamis City and Cagayan de Oro City in the
company of the complainants.6 She insisted that the complainants, resenting her demand for
reimbursements, then brought the charge for illegal recruitment against her to get even. The CA
disbelieved her denial, however, and pointed out that:

Although private complainants do not deny that they did not spend a single centavo for all the expenses
they have incurred during such trips, it appears from their combined testimonies that they were led to
believe that the payments they have made were in consideration of their application to work in Taiwan
and not for their outings.7

We uphold the CAs appreciation of the situation. The accuseds allegation about this accusation
emanating from the complainants resentment could only be bereft of substance. For one, the fact that, as
the RTC found, two of the complainants (i.e., Ma. Corazon A. Garcia and Jocelyn Flores) did not even
join the trips8 entirely belied the allegation. Besides, although the complainants who had joined her in the
trips had admittedly spent not a single centavo for the trips, their testimonies unerringly pointed
nonetheless to the singular conclusion that she had led them to believe that what they were paying for was
their promised overseas employment, not the trips. Such testimonies, which positively and unequivocally
described her illegal activities of recruitment, prevailed over her denial, which was nothing but self-
serving negative evidence.9 Indeed, it was further shown that the accused had communicated to the
complainants the dates of their departure for Taiwan after receiving the various sums she had demanded,
which was further proof of her promise to deploy them in Taiwan.
The urging of the accused that the Court should review her case due to the conflicting versions of the
parties is unwarranted. The determination of which of the different versions was to be believed is
fundamentally an issue of credibility whose resolution belonged to the domain of the trial judge who had
observed the deportment and manner of the witnesses at the time of their testimony.10 The Court naturally
accords great respect to the trial judges evaluation of the credibility of witnesses, because the trial judge
was in the best position to assess the credibility of witnesses and their testimonies by reason of his unique
opportunity to observe the witnesses firsthand and to note their demeanor, conduct, and attitude under
grilling examination.11 With more reason do we hold so herein, for the CA, as the reviewing tribunal,
affirmed the RTC, as the trial court.12 The accused bore the ensuing obligation to demonstrate to our
satisfaction that the CA had overlooked, misconstrued, or misinterpreted facts and circumstances of
substance that, if considered, would change the outcome. Alas, she did not do so.1wphi1

Nor should we pay heed to the contention of the accused that the version of the State weakened because
only four out of the nine named complainants had actually testified in court against her. That contention
ignores that in judicial adjudications, courts do not count but weigh witnesses; thus, quality of witnesses,
not their quantity, is considered.13

Finally, the failure of the State to present receipts proving that the payments by the complainants was in
consideration of their recruitment to Taiwan does not negate the guilt of the accused. This argument is not
novel and unprecedented, for the Court has already ruled that the absence of receipts evidencing payment
does not defeat a criminal prosecution for illegal recruitment. According to People v. Pabalan:14

xxx the absence of receipts in a criminal case for illegal recruitment does not warrant the acquittal of the
accused and is not fatal to the case of the prosecution. As long as the witnesses had positively shown
through their respective testimonies that the accused is the one involved in the prohibited recruitment, he
may be convicted of the offense despite the want of receipts.

The Statute of Frauds and the rules of evidence do not require the presentation of receipts in order to
prove the existence of recruitment agreement and the procurement of fees in illegal recruitment cases. The
amounts may consequently be proved by the testimony of witnesses.15

Consequently, as long as the State established through credible testimonial evidence that the accused had
engaged in illegal recruitment, her conviction was justified.16 That is what we find herein.

On the penalty for illegal recruitment in large scale, Article 39 of the Labor Code relevantly states:

Article 39. Penalties. - (a) The penalty of life imprisonment and a fine of One Hundred Thousand Pesos
(P100,000.00) shall be imposed if illegal recruitment constitutes economic sabotage as defined herein;

xxx

Both lower courts correctly found that the accuseds acts fell squarely under Article 13(b) of the Labor
Code due to the number of her victims being at least four. Hence, the penalty of life imprisonment and
fine of P100,000.00 as prescribed under Article 39 (a) of the Labor Code was proper.

WHEREFORE, the Court affirms the decision of the Court of Appeals promulgated on April 29, 2005.

SO ORDERED.
 Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

PEOPLE OF THE PHILIPPINES, G.R. No. 173198

Plaintiff-Appellee,
Present:

CORONA, C.J.,

Chairperson,

VELASCO, JR.,

LEONARDO-DE CASTRO,

- versus - PERALTA,* and

PEREZ, JJ.

Promulgated:

DOLORES OCDEN, June 1, 2011

Accused-Appellant.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

LEONARDO-DE CASTRO, J.:

For Our consideration is an appeal from the Decision[1] dated April 21, 2006 of the Court of Appeals
in CA-G.R. CR.-H.C. No. 00044, which affirmed with modification the Decision[2] dated July 2, 2001 of
the Regional Trial Court (RTC), Baguio City, Branch 60, in Criminal Case No. 16315-R. The RTC found
accused-appellant Dolores Ocden (Ocden) guilty of illegal recruitment in large scale, as defined and
penalized under Article 13(b), in relation to Articles 38(b), 34, and 39 of Presidential Decree No. 442,
otherwise known as the New Labor Code of the Philippines, as amended, in Criminal Case No. 16315-R;
and of the crime of estafa under paragraph 2(a), Article 315 of the Revised Penal Code, in Criminal Case
Nos. 16316-R, 16318-R, and 16964-R.[3] The Court of Appeals affirmed Ocdens conviction in all four
cases, but modified the penalties imposed in Criminal Case Nos. 16316-R, 16318-R, and 16964-R,

The Amended Information[4] for illegal recruitment in large scale in Criminal Case No. 16315-R reads:

That during the period from May to December, 1998, in the City of Baguio, Philippines,
and within the jurisdiction of this Honorable Court, the above-named accused, did then
and there willfully, unlawfully and feloniously for a fee, recruit and promise employment
as factory workers in Italy to more than three (3) persons including, but not limited to the
following: JEFFRIES C. GOLIDAN, HOWARD C. GOLIDAN, KAREN M. SIMEON,
JEAN S. MAXIMO, NORMA PEDRO, MARYLYN MANA-A, RIZALINA FERRER,
and MILAN DARING without said accused having first secured the necessary license or
authority from the Department of Labor and Employment.

Ocden was originally charged with six counts of estafa in Criminal Case Nos. 16316-R, 16318-R,
16350-R, 16369-R, 16964-R, and 16966-R.

The Information in Criminal Case No. 16316-R states:

That sometime during the period from October to December, 1998 in the City of
Baguio, Philippines and within the jurisdiction of this Honorable Court, the above-named
accused, did then and there willfully, unlawfully and feloniously defraud JEFFRIES C.
GOLIDAN, by way of false pretenses, which are executed prior to or simultaneous with
the commission of the fraud, as follows, to wit: the accused knowing fully well that she is
not (sic) authorized job recruiter for persons intending to secure work abroad convinced
said Jeffries C. Golidan and pretended that she could secure a job for him/her abroad, for
and in consideration of the sum of P70,000.00 when in truth and in fact they could not;
the said Jeffries C. Golidan deceived and convinced by the false pretenses employed by
the accused parted away the total sum of P70,000.00, in favor of the accused, to the
damage and prejudice of the said Jeffries C. Golidan in the aforementioned amount
of SEVENTY THOUSAND PESOS (P70,000,00), Philippine Currency.[5]

The Informations in the five other cases for estafa contain substantially the same allegations as
the one above-quoted, except for the private complainants names, the date of commission of the offense,
and the amounts defrauded, to wit:

Case No. Name of the Date of Amount Private Complainant Commission of Defrauded
the Offense
16318-R Howard C. Golidan Sometime during the P70,000.00
period from October
to December 1998
16350-R Norma Pedro Sometime in May, 1998 P65,000.00

16369-R Milan O. Daring Sometime during the P70.000.00

period from November
13, 1998 to December
10, 1998

16964-R Rizalina Ferrer Sometime in September P70,000.00

16966-R Marilyn Mana-a Sometime in September P70,000.00[6]

1998

All seven cases against Ocden were consolidated on July 31, 2000 and were tried jointly after Ocden
pleaded not guilty.

The prosecution presented three witnesses namely: Marilyn Mana-a (Mana-a) and Rizalina Ferrer
(Ferrer), complainants; and Julia Golidan (Golidan), mother of complainants Jeffries and Howard
Golidan.

Mana-a testified that sometime in the second week of August 1998, she and Isabel Dao-as (Dao-as) went
to Ocdens house in Baguio City to apply for work as factory workers in Italy with monthly salaries of
US$1,200.00. They were required by Ocden to submit their bio-data and passports, pay the placement fee
of P70,000.00, and to undergo medical examination.

Upon submitting her bio-data and passport, Mana-a paid Ocden P500.00 for her certificate of employment
and P20,000.00 as down payment for her placement fee. On September 8, 1998, Ocden accompanied
Mana-a and 20 other applicants to Zamora Medical Clinic in Manila for their medical examinations, for
which each of the applicants paid P3,000.00. Mana-a also paid to Ocden P22,000.00 as the second
installment on her placement fee. When Josephine Lawanag (Lawanag), Mana-as sister, withdrew her
application, Lawanags P15,000.00 placement fee, already paid to Ocden, was credited to Mana-a.[7]

Mana-a failed to complete her testimony, but the RTC considered the same as no motion to strike
the said testimony was filed.

Ferrer narrated that she and her daughter Jennilyn were interested to work overseas. About the second
week of September 1998, they approached Ocden through Fely Alipio (Alipio). Ocden showed Ferrer and
Jennilyn a copy of a job order from Italy for factory workers who could earn as much as $90,000.00 to
$100,000.00.[8] In the first week of October 1998, Ferrer and Jennilyn decided to apply for work, so they
submitted their passports and pictures to Ocden. Ferrer also went to Manila for medical examination, for
which she spent P3,500.00. Ferrer paid to Ocden on November 20, 1998 the initial amount of P20,000.00,
and on December 8, 1998 the balance of her and Jennilyns placement fees. All in all, Ferrer paid
Ocden P140,000.00, as evidenced by the receipts issued by Ocden.[9]

Ferrer, Jennilyn, and Alipio were supposed to be included in the first batch of workers to be sent to
Italy. Their flight was scheduled on December 10, 1998. In preparation for their flight to Italy, the three
proceeded to Manila. In Manila, they were introduced by Ocden to Erlinda Ramos (Ramos). Ocden and
Ramos then accompanied Ferrer, Jennilyn, and Alipio to the airport where they took a flight to
Zamboanga. Ocden explained to Ferrer, Jennilyn, and Alipio that they would be transported to Malaysia
where their visa application for Italy would be processed.

Sensing that they were being fooled, Ferrer and Jennilyn decided to get a refund of their money, but
Ocden was nowhere to be found. Ferrer would later learn from the Baguio office of the Philippine
Overseas Employment Administration (POEA) that Ocden was not a licensed recruiter.

Expecting a job overseas, Ferrer took a leave of absence from her work. Thus, she lost income amounting
to P17,700.00, equivalent to her salary for one and a half months. She also spent P30,000.00 for
transportation and food expenses.[10]

According to Golidan, the prosecutions third witness, sometime in October 1998, she inquired from
Ocden about the latters overseas recruitment.Ocden informed Golidan that the placement fee
was P70,000.00 for each applicant, that the accepted applicants would be sent by batches overseas, and
that priority would be given to those who paid their placement fees early. On October 30, 1998, Golidan
brought her sons, Jeffries and Howard, to Ocden. On the same date, Jeffries and Howard handed over to
Ocden their passports and P40,000.00 as down payment on their placement fees. On December 10, 1998,
Jeffries and Howard paid the balance of their placement fees amounting to P100,000.00. Ocden issued
receipts for these two payments.[11] Ocden then informed Golidan that the first batch of accepted
applicants had already left, and that Jeffries would be included in the second batch for deployment, while
Howard in the third batch.

In anticipation of their deployment to Italy, Jeffries and Howard left for Manila on December 12, 1998
and December 18, 1998, respectively.Through a telephone call, Jeffries informed Golidan that his flight to
Italy was scheduled on December 16, 1998. However, Golidan was surprised to again receive a telephone
call from Jeffries saying that his flight to Italy was delayed due to insufficiency of funds, and that Ocden
went back to Baguio City to look for additional funds. When Golidan went to see Ocden, Ocden was
about to leave for Manila so she could be there in time for the scheduled flights of Jeffries and Howard.

On December 19, 1998, Golidan received another telephone call from Jeffries who was in Zamboanga
with the other applicants. Jeffries informed Golidan that he was stranded in Zamboanga because Ramos
did not give him his passport. Ramos was the one who briefed the overseas job applicants in Baguio City
sometime in November 1998. Jeffries instructed Golidan to ask Ocdens help in looking for
Ramos. Golidan, however, could not find Ocden in Baguio City.

On December 21, 1998, Golidan, with the other applicants, Mana-a and Dao-as, went to Manila to meet
Ocden. When Golidan asked why Jeffries was in Zamboanga, Ocden replied that it would be easier for
Jeffries and the other applicants to acquire their visas to Italy in Zamboanga. Ocden was also able to
contact Ramos, who assured Golidan that Jeffries would be able to get his passport. When Golidan went
back home to Baguio City, she learned through a telephone call from Jeffries that Howard was now
likewise stranded in Zamboanga.

By January 1999, Jeffries and Howard were still in Zamboanga. Jeffries refused to accede to Golidans
prodding for him and Howard to go home, saying that the recruiters were already working out the release
of the funds for the applicants to get to Italy. Golidan went to Ocden, and the latter told her not to worry
as her sons would already be flying to Italy because the same factory owner in Italy, looking for workers,
undertook to shoulder the applicants travel expenses. Yet, Jeffries called Golidan once more telling her
that he and the other applicants were still in Zamboanga.
 Golidan went to Ocdens residence. This time, Ocdens husband gave Golidan P23,000.00 which
the latter could use to fetch the applicants, including Jeffries and Howard, who were stranded in
Zamboanga. Golidan traveled again to Manila with Mana-a and Dao-as. When they saw each other,
Golidan informed Ocden regarding the P23,000.00 which the latters husband gave to her. Ocden begged
Golidan to give her the money because she needed it badly. Of the P23,000.00, Golidan
retained P10,000.00, Dao-as received P3,000.00, and Ocden got the rest. Jeffries was able to return to
Manila on January 16, 1999. Howard and five other applicants, accompanied by Ocden, also arrived in
Manila five days later.

Thereafter, Golidan and her sons went to Ocdens residence to ask for a refund of the money they had paid
to Ocden. Ocden was able to return only P50,000.00. Thus, out of the total amount of P140,000.00
Golidan and her sons paid to Ocden, they were only able to get back the sum of P60,000.00. After all that
had happened, Golidan and her sons went to the Baguio office of the POEA, where they discovered that
Ocden was not a licensed recruiter.[12]

The defense presented the testimony of Ocden herself.

Ocden denied recruiting private complainants and claimed that she was also an applicant for an overseas
job in Italy, just like them. Ocden identified Ramos as the recruiter.

Ocden recounted that she met Ramos at a seminar held in St. Theresas Compound, Navy Base, Baguio
City, sometime in June 1998. The seminar was arranged by Aida Comila (Comila), Ramoss sub-
agent. The seminar was attended by about 60 applicants, including Golidan. Ramos explained how one
could apply as worker in a stuff toys factory in Italy. After the seminar, Comila introduced Ocden to
Ramos. Ocden decided to apply for the overseas job, so she gave her passport and pictures to
Ramos. Ocden also underwent medical examination at Zamora Medical Clinic in Manila, and completely
submitted the required documents to Ramos in September 1998.

After the seminar, many people went to Ocdens house to inquire about the jobs available in Italy. Since
most of these people did not attend the seminar, Ocden asked Ramos to conduct a seminar at Ocdens
house. Two seminars were held at Ocdens house, one in September and another in December 1998. After
said seminars, Ramos designated Ocden as leader of the applicants. As such, Ocden received her co-
applicants applications and documents; accompanied her co-applicants to Manila for medical examination
because she knew the location of Zamora Medical Clinic; and accepted placement fees in the amount
of P70,000.00 each from Mana-a and Ferrer and from Golidan, the amount of P140,000.00 (for Jeffries
and Howard).

Ramos instructed Ocden that the applicants should each pay P250,000.00 and if the applicants
could not pay the full amount, they would have to pay the balance through salary deductions once they
start working in Italy. Ocden herself paid Ramos P50,000.00 as placement fee and executed a promissory
note in Ramoss favor for the balance, just like any other applicant who failed to pay the full
amount. Ocden went to Malaysia with Ramoss male friend but she failed to get her visa for Italy.

Ocden denied deceiving Mana-a and Ferrer. Ocden alleged that she turned over to Ramos the money
Mana-a and Ferrer gave her, although she did not indicate in the receipts she issued that she received the
money for and on behalf of Ramos.

Ocden pointed out that she and some of her co-applicants already filed a complaint against Ramos before
the National Bureau of Investigation (NBI) offices in Zamboanga City and Manila.[13]
On July 2, 2001, the RTC rendered a Decision finding Ocden guilty beyond reasonable doubt of the
crimes of illegal recruitment in large scale (Criminal Case No. 16315-R) and three counts of estafa
(Criminal Case Nos. 16316-R, 16318-R, and 16964-R). The dispositive portion of said decision reads:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. In Criminal Case No. 16315-R, the Court finds the accused, DOLORES
OCDEN, GUILTY beyond reasonable doubt of the crime of Illegal Recruitment
committed in large scale as defined and penalized under Article 13(b) in relation to
Article 38(b), 34 and 39 of the Labor Code as amended by P.D. Nos. 1693, 1920, 2018
and R.A. 8042. She is hereby sentenced to suffer the penalty of life imprisonment and to
pay a fine of P100,000.00;

2. In Criminal Case No. 16316-R, the Court finds the accused, DOLORES
OCDEN, GUILTY beyond reasonable doubt of the crime of estafa and sentences her to
suffer an indeterminate penalty ranging from two (2) years, eleven (11) months and ten
(10) days of prision correccional, as minimum, up to nine (9) years and nine (9) months
of prision mayor, as maximum, and to indemnify the complainant Jeffries Golidan the
amount of P40,000.00;

3. In Criminal Case No. 16318-R, the Court finds the accused, DOLORES
OCDEN, GUILTY beyond reasonable doubt of the crime of estafa and sentences her to
suffer an indeterminate penalty ranging from two (2) years, eleven (11) months and ten
(10) days of prision correccional, as minimum, up to nine (9) years and nine (9) months
of prision mayor, as maximum, and to indemnify Howard Golidan the amount
of P40,000.00;

4. In Criminal Case No. 16350-R, the Court finds the accused, DOLORES
OCDEN, NOT GUILTY of the crime of estafa for lack of evidence and a verdict of
acquittal is entered in her favor;

5. In Criminal Case No. 16369-R, the Court finds the accused, DOLORES
OCDEN, NOT GUILTY of the crime of estafa for lack of evidence and a verdict of
acquittal is hereby entered in her favor;

6. In Criminal Case No. 16964-R, the Court finds the accused, DOLORES
OCDEN, GUILTY beyond reasonable doubt of the crime of estafa and sentences her to
suffer an indeterminate penalty of Four (4) years and Two (2) months of prision
correccional, as minimum, up to Twelve (12) years and Nine (9) months of reclusion
temporal, as maximum, and to indemnify Rizalina Ferrer the amount of P70,000.00; and

7. In Criminal Case No. 16966-R, the Court finds the accused, DOLORES
OCDEN, NOT GUILTY of the crime of estafa for insufficiency of evidence and a verdict
of acquittal is hereby entered in her favor.
 In the service of her sentence, the provisions of Article 70 of the Penal Code shall
be observed.[14]

Aggrieved by the above decision, Ocden filed with the RTC a Notice of Appeal on August 15,
2001.[15] The RTC erroneously sent the records of the cases to the Court of Appeals, which, in turn,
correctly forwarded the said records to us.
In our Resolution[16] dated May 6, 2002, we accepted the appeal and required the parties to file their
respective briefs. In the same resolution, we directed the Superintendent of the Correctional Institute for
Women to confirm Ocdens detention thereat.

Ocden filed her Appellant's Brief on August 15, 2003,[17] while the People, through the Office of
the Solicitor General, filed its Appellee's Brief on January 5, 2004.[18]

Pursuant to our ruling in People v. Mateo,[19] we transferred Ocdens appeal to the Court of
Appeals. On April 21, 2006, the appellate court promulgated its Decision, affirming Ocdens conviction
but modifying the penalties imposed upon her for the three counts of estafa, viz:

[T]he trial court erred in the imposition of accused-appellants penalty.

Pursuant to Article 315 of the RPC, the penalty for estafa is prision
correccional in its maximum period to prision mayor in its minimum period. If the
amount of the fraud exceeds P22,000.00, the penalty provided shall be imposed in its
maximum period (6 years, 8 months and 21 days to 8 years), adding 1 year for each
additional P10,000.00; but the total penalty which may be imposed shall not exceed 20
years.

Criminal Case Nos. 16316-R and 16318-R involve the amount of P40,000.00
each. Considering that P18,000.00 is the excess amount, only 1 year should be added to
the penalty in its maximum period or 9 years. Also, in Criminal Case No. 16964-R, the
amount involved is P70,000.00. Thus, the excess amount is P48,000.00 and only 4
years should be added to the penalty in its maximum period.

WHEREFORE, the instant appeal is DISMISSED. The assailed Decision, dated

02 July 2001, of the Regional Trial Court (RTC) of Baguio City, Branch 60 is
hereby AFFIRMED with the following MODIFICATIONS:

1. In Criminal Case No. 16316-R, accused-appellant is sentenced to 2 years,

11 months, and 10 days of prision correccional, as minimum to 9 years
 of prision mayor, as maximum and to indemnify Jeffries Golidan the amount
of P40,000.00;

2. In Criminal Case No. 16318-R, accused-appellant is sentenced to 2 years,

11 months, and 10 days of prision correccional, as minimum to 9 years
of prision mayor, as maximum and to indemnify Howard Golidan the
amount of P40,000.00; and

3. In Criminal Case No. 16964-R, accused-appellant is sentenced to 4 years

and 2 months of prision correccional, as minimum to 12 years of prision
mayor, as maximum and to indemnify Rizalina Ferrer the amount
of P70,000.00.[20]

Hence, this appeal, in which Ocden raised the following assignment of errors:

THE TRIAL COURT ERRED IN CONVICTING ACCUSED-APPELLANT OF

ILLEGAL RECRUITMENT COMMITTED IN LARGE SCALE ALTHOUGH THE
CRIME WAS NOT PROVEN BEYOND REASONABLE DOUBT.

II

THE TRIAL COURT ERRED IN CONVICTING ACCUSED-APPELLANT OF

ESTAFA IN CRIMINAL CASES NOS. 16316-R, 16318-R AND 16[9]64-R.[21]

After a thorough review of the records of the case, we find nothing on record that would justify a
reversal of Ocdens conviction.

Illegal recruitment in large scale

Ocden contends that the prosecution failed to prove beyond reasonable doubt that she is guilty of the
crime of illegal recruitment in large scale.Other than the bare allegations of the prosecution witnesses, no
evidence was adduced to prove that she was a non-licensee or non-holder of authority to lawfully engage
in the recruitment and placement of workers. No certification attesting to this fact was formally offered in
evidence by the prosecution.

Ocdens aforementioned contentions are without merit.

Article 13, paragraph (b) of the Labor Code defines and enumerates the acts which constitute recruitment
and placement:

(b) Recruitment and placement refers to any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring workers, and includes referrals, contract
services, promising for advertising for employment locally or abroad, whether for profit
or not: Provided, That any person or entity which, in any manner, offers or promises for a
fee employment to two or more persons shall be deemed engaged in recruitment and
placement.

The amendments to the Labor Code introduced by Republic Act No. 8042, otherwise known as
the Migrant Workers and Overseas Filipinos Act of 1995, broadened the concept of illegal
recruitment and provided stiffer penalties, especially for those that constitute economic
sabotage, i.e., illegal recruitment in large scale and illegal recruitment committed by a syndicate. Pertinent
provisions of Republic Act No. 8042 are reproduced below:

SEC. 6. Definition. - For purposes of this Act, illegal recruitment shall mean any
act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring
workers and includes referring, contract services, promising or advertising for
employment abroad, whether for profit or not, when undertaken by a non-licensee or non-
holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as
amended, otherwise known as the Labor Code of the Philippines: Provided, That any
such non-licensee or non-holder who, in any manner, offers or promises for a fee
employment abroad to two or more persons shall be deemed so engaged. It shall likewise
include the following acts, whether committed by any person, whether a non-
licensee, non-holder, licensee or holder of authority:

(a) To charge or accept directly or indirectly any amount greater than that specified in the
schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to
make a worker pay any amount greater than that actually received by him as a loan or
advance;

(b) To furnish or publish any false notice or information or document in relation to

recruitment or employment;

(c) To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under the Labor
Code;

(d) To induce or attempt to induce a worker already employed to quit his employment in
order to offer him another unless the transfer is designed to liberate a worker from
oppressive terms and conditions of employment;

(e) To influence or attempt to influence any person or entity not to employ any worker
who has not applied for employment through his agency;

(f) To engage in the recruitment or placement of workers in jobs harmful to public health
or morality or to the dignity of the Republic of the Philippines;

(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor and

Employment or by his duly authorized representative;

(h) To fail to submit reports on the status of employment, placement vacancies,

remittance of foreign exchange earnings, separation from jobs, departures and such other
matters or information as may be required by the Secretary of Labor and Employment;
(i) To substitute or alter to the prejudice of the worker, employment contracts approved
and verified by the Department of Labor and Employment from the time of actual signing
thereof by the parties up to and including the period of the expiration of the same without
the approval of the Department of Labor and Employment;

(j) For an officer or agent of a recruitment or placement agency to become an officer or

member of the Board of any corporation engaged in travel agency or to be engaged
directly or indirectly in the management of a travel agency;

(k) To withhold or deny travel documents from applicant workers before departure for
monetary or financial considerations other than those authorized under the Labor Code
and its implementing rules and regulations;

(l) Failure to actually deploy without valid reason as determined by the Department of
Labor and Employment; and

(m) Failure to reimburse expenses incurred by the worker in connection with his
documentation and processing for purposes of deployment, in cases where the
deployment does not actually take place without the worker's fault. Illegal
recruitment when committed by a syndicate or in large scale shall be considered an
offense involving economic sabotage.

Illegal recruitment is deemed committed by a syndicate if carried out by a group of three

(3) or more persons conspiring or confederating with one another. It is deemed
committed in large scale if committed against three (3) or more persons individually or as
a group.

xxxx

Sec. 7. Penalties.
 (a) Any person found guilty of illegal recruitment shall suffer the penalty of
imprisonment of not less than six (6) years and one (1) day but not more than twelve (12)
years and a fine of Two hundred thousand pesos (P200,000.00) nor more than Five
hundred thousand pesos (P500,000.00).

(b) The penalty of life imprisonment and a fine of not less than Five hundred thousand
pesos (P500,000.00) nor more than One million pesos (P1,000,000.00) shall be imposed
if illegal recruitment constitutes economic sabotage as defined herein.

Provided, however, That the maximum penalty shall be imposed if the

person illegally recruited is less than eighteen (18) years of age or committed by a non-
licensee or non-holder of authority. (Emphasis ours.)

It is well-settled that to prove illegal recruitment, it must be shown that appellant gave
complainants the distinct impression that he had the power or ability to send complainants abroad for
work such that the latter were convinced to part with their money in order to be employed. [22]As testified
to by Mana-a, Ferrer, and Golidan, Ocden gave such an impression through the following acts: (1) Ocden
informed Mana-a, Ferrer, and Golidan about the job opportunity in Italy and the list of necessary
requirements for application; (2) Ocden required Mana-a, Ferrer, and Golidans sons, Jeffries and Howard,
to attend the seminar conducted by Ramos at Ocdens house in Baguio City; (3) Ocden received the job
applications, pictures, bio-data, passports, and the certificates of previous employment (which was also
issued by Ocden upon payment of P500.00), of Mana-a, Ferrer, and Golidans sons, Jeffries and Howard;
(4) Ocden personally accompanied Mana-a, Ferrer, and Golidans sons, Jeffries and Howard, for their
medical examinations in Manila; (5) Ocden received money paid as placement fees by Mana-a, Ferrer,
and Golidans sons, Jeffries and Howard, and even issued receipts for the same; and (6) Ocden assured
Mana-a, Ferrer, and Golidans sons, Jeffries and Howard, that they would be deployed to Italy.

It is not necessary for the prosecution to present a certification that Ocden is a non-licensee or
non-holder of authority to lawfully engage in the recruitment and placement of workers. Section 6 of
Republic Act No. 8042 enumerates particular acts which would constitute illegal recruitment whether
committed by any person, whether a non-licensee, non-holder, licensee or holder of authority. Among
such acts, under Section 6(m) of Republic Act No. 8042, is the [f]ailure to reimburse expenses incurred
by the worker in connection with his documentation and processing for purposes of deployment, in cases
where the deployment does not actually take place without the workers fault.

Since illegal recruitment under Section 6(m) can be committed by any person, even by a licensed
recruiter, a certification on whether Ocden had a license to recruit or not, is inconsequential. Ocden
committed illegal recruitment as described in said provision by receiving placement fees from Mana-a,
Ferrer, and Golidans two sons, Jeffries and Howard, evidenced by receipts Ocden herself issued; and
failing to reimburse/refund to Mana-a, Ferrer, and Golidans two sons the amounts they had paid when
they were not able to leave for Italy, through no fault of their own.

Ocden questions why it was Golidan who testified for private complainants Jeffries and
Howard. Golidan had no personal knowledge of the circumstances proving illegal recruitment and could
not have testified on the same. Also, Jeffries and Howard already executed an affidavit of desistance. All
Golidan wants was a reimbursement of the placement fees paid.

Contrary to Ocdens claims, Golidan had personal knowledge of Ocdens illegal recruitment
activities, which she could competently testify to. Golidan herself had personal dealings with Ocden as
Golidan assisted her sons, Jeffries and Howard, in completing the requirements for their overseas job
applications, and later on, in getting back home from Zamboanga where Jeffries and Howard were
stranded, and in demanding a refund from Ocden of the placement fees paid. That Golidan is seeking a
reimbursement of the placement fees paid for the failed deployment of her sons Jeffries and Howard
strengthens, rather than weakens, the prosecutions case. Going back to illegal recruitment under Section
6(m) of Republic Act No. 8042, failure to reimburse the expenses incurred by the worker when
deployment does not actually take place, without the workers fault, is illegal recruitment.

The affidavit of desistance purportedly executed by Jeffries and Howard does not exonerate
Ocden from criminal liability when the prosecution had successfully proved her guilt beyond reasonable
doubt. In People v. Romero,[23] we held that:

The fact that complainants Bernardo Salazar and Richard Quillope executed a
Joint Affidavit of Desistance does not serve to exculpate accused-appellant from criminal
liability insofar as the case for illegal recruitment is concerned since the Court looks with
disfavor the dropping of criminal complaints upon mere affidavit of desistance of the
complainant, particularly where the commission of the offense, as is in this case, is duly
supported by documentary evidence.
 Generally, the Court attaches no persuasive value to affidavits of desistance,
especially when it is executed as an afterthought. It would be a dangerous rule for courts
to reject testimonies solemnly taken before the courts of justice simply because the
witnesses who had given them, later on, changed their mind for one reason or another, for
such rule would make solemn trial a mockery and place the investigation of truth at the
mercy of unscrupulous witness.

Complainants Bernardo Salazar and Richard Quillope may have a change of

heart insofar as the offense wrought on their person is concerned when they executed
their joint affidavit of desistance but this will not affect the public prosecution of the
offense itself. It is relevant to note that the right of prosecution and punishment for a
crime is one of the attributes that by a natural law belongs to the sovereign power
instinctly charged by the common will of the members of society to look after, guard and
defend the interests of the community, the individual and social rights and the liberties of
every citizen and the guaranty of the exercise of his rights. This cardinal principle which
states that to the State belongs the power to prosecute and punish crimes should not be
overlooked since a criminal offense is an outrage to the sovereign State.[24]

In her bid to exculpate herself, Ocden asserts that she was also just an applicant for overseas
employment; and that she was receiving her co-applicants job applications and other requirements, and
accepting her co-applicants payments of placement fees, because she was designated as the applicants
leader by Ramos, the real recruiter.

Ocdens testimony is self-serving and uncorroborated. Ocdens denial of any illegal recruitment
activity cannot stand against the prosecution witnesses positive identification of her in court as the person
who induced them to part with their money upon the misrepresentation and false promise of deployment
to Italy as factory workers. Besides, despite several opportunities given to Ocden by the RTC, she failed
to present Ramos, who Ocden alleged to be the real recruiter and to whom she turned over the placement
fees paid by her co-applicants.

Between the categorical statements of the prosecution witnesses, on the one hand, and the bare
denial of Ocden, on the other, the former must perforce prevail. An affirmative testimony is far stronger
than a negative testimony especially when the former comes from the mouth of a credible witness. Denial,
same as an alibi, if not substantiated by clear and convincing evidence, is negative and self-serving
evidence undeserving of weight in law. It is considered with suspicion and always received with caution,
not only because it is inherently weak and unreliable but also because it is easily fabricated and
concocted.[25]

Moreover, in the absence of any evidence that the prosecution witnesses were motivated by
improper motives, the trial courts assessment of the credibility of the witnesses shall not be interfered
with by this Court.[26] It is a settled rule that factual findings of the trial courts, including their assessment
of the witnesses credibility, are entitled to great weight and respect by the Supreme Court, particularly
when the Court of Appeals affirmed such findings. After all, the trial court is in the best position to
determine the value and weight of the testimonies of witnesses. The absence of any showing that the trial
court plainly overlooked certain facts of substance and value that, if considered, might affect the result of
the case, or that its assessment was arbitrary, impels the Court to defer to the trial courts determination
according credibility to the prosecution evidence.[27]

Ocden further argues that the prosecution did not sufficiently establish that she illegally recruited
at least three persons, to constitute illegal recruitment on a large scale. Out of the victims named in the
Information, only Mana-a and Ferrer testified in court. Mana-a did not complete her testimony, depriving
Ocden of the opportunity to cross-examine her; and even if Mana-as testimony was not expunged from
the record, it was insufficient to prove illegal recruitment by Ocden. Although Ferrer testified that she and
Mana-a filed a complaint for illegal recruitment against Ocden, Ferrers testimony is competent only as to
the illegal recruitment activities committed by Ocden against her, and not against Mana-a.Ocden again
objects to Golidans testimony as hearsay, not being based on Golidans personal knowledge.

Under the last paragraph of Section 6, Republic Act No. 8042, illegal recruitment shall be
considered an offense involving economic sabotage if committed in a large scale, that is, committed
against three or more persons individually or as a group.

In People v. Hu,[28] we held that a conviction for large scale illegal recruitment must be based on a
finding in each case of illegal recruitment of three or more persons, whether individually or as a
group. While it is true that the law does not require that at least three victims testify at the trial,
nevertheless, it is necessary that there is sufficient evidence proving that the offense was committed
against three or more persons. In this case, there is conclusive evidence that Ocden recruited Mana-a,
Ferrer, and Golidans sons, Jeffries and Howard, for purported employment as factory workers in Italy. As
aptly observed by the Court of Appeals:

Mana-as testimony, although not completed, sufficiently established that

accused-appellant promised Mana-a a job placement in a factory in Italy for a fee with
accused-appellant even accompanying her for the required medical
examination. Likewise, Julia Golidans testimony adequately proves that accused-
appellant recruited Jeffries and Howard Golidan for a job in Italy, also for a fee. Contrary
to the accused-appellants contention, Julia had personal knowledge of the facts and
circumstances surrounding the charges for illegal recruitment and estafa filed by her
sons. Julia was not only privy to her sons recruitment but also directly transacted with
accused-appellant, submitting her sons requirements and paying the placement fees as
evidenced by a receipt issued in her name.Even after the placement did not materialize,
Julia acted with her sons to secure the partial reimbursement of the placement fees.[29]

And even though only Ferrer and Golidan testified as to Ocdens failure to reimburse the
placements fees paid when the deployment did not take place, their testimonies already established the
fact of non-reimbursement as to three persons, namely, Ferrer and Golidans two sons, Jeffries and
Howard.

Section 7(b) of Republic Act No. 8042 prescribes a penalty of life imprisonment and a fine of not
less than P500,000.00 nor more than P1,000,000.00 if the illegal recruitment constitutes economic
sabotage. The RTC, as affirmed by the Court of Appeals, imposed upon Ocden the penalty of life
imprisonment and a fine of only P100,000.00. Since the fine of P100,000 is below the minimum set by
law, we are increasing the same to P500,000.00.
Estafa

We are likewise affirming the conviction of Ocden for the crime of estafa. The very same
evidence proving Ocdens liability for illegal recruitment also established her liability for estafa.

It is settled that a person may be charged and convicted separately of illegal recruitment under
Republic Act No. 8042 in relation to the Labor Code, and estafa under Article 315, paragraph 2(a) of the
Revised Penal Code. We explicated in People v. Yabut[30] that:

In this jurisdiction, it is settled that a person who commits illegal recruitment

may be charged and convicted separately of illegal recruitment under the Labor Code and
estafa under par. 2(a) of Art. 315 of the Revised Penal Code. The offense of illegal
recruitment is malum prohibitum where the criminal intent of the accused is not
necessary for conviction, while estafa is malum in se where the criminal intent of the
accused is crucial for conviction. Conviction for offenses under the Labor Code does not
bar conviction for offenses punishable by other laws. Conversely, conviction for estafa
under par. 2(a) of Art. 315 of the Revised Penal Code does not bar a conviction for illegal
recruitment under the Labor Code. It follows that ones acquittal of the crime of estafa
will not necessarily result in his acquittal of the crime of illegal recruitment in large scale,
and vice versa.[31]

Article 315, paragraph 2(a) of the Revised Penal Code defines estafa as:

Art. 315. Swindling (estafa). - Any person who shall defraud another by any of the means
mentioned hereinbelow x x x:

xxxx

2. By means of any of the following false pretenses or fraudulent acts executed prior to or
simultaneously with the commission of the fraud:

(a) By using fictitious name, or falsely pretending to possess power, influence,

qualifications, property, credit, agency, business or imaginary transactions; or by means
of other similar deceits.
 The elements of estafa are: (a) that the accused defrauded another by abuse of confidence or by
means of deceit, and (b) that damage or prejudice capable of pecuniary estimation is caused to the
offended party or third person.[32]

Both these elements are present in the instant case. Ocden represented to Ferrer, Golidan, and
Golidans two sons, Jeffries and Howard, that she could provide them with overseas jobs. Convinced by
Ocden, Ferrer, Golidan, and Golidans sons paid substantial amounts as placement fees to her. Ferrer and
Golidans sons were never able to leave for Italy, instead, they ended up in Zamboanga, where, Ocden
claimed, it would be easier to have their visas to Italy processed. Despite the fact that Golidans sons,
Jeffries and Howard, were stranded in Zamboanga for almost a month, Ocden still assured them and their
mother that they would be able to leave for Italy. There is definitely deceit on the part of Ocden and
damage on the part of Ferrer and Golidans sons, thus, justifying Ocdens conviction for estafa in Criminal
Case Nos. 16316-R, 16318-R, and 16964-R.

The penalty for estafa depends on the amount of defraudation. According to Article 315 of the
Revised Penal Code:

Art. 315. Swindling (estafa). Any person who shall defraud another by any of the
means mentioned hereinbelow shall be punished by:

1st. The penalty of prision correccional in its maximum period to prision

mayor in its minimum period, if the amount of the fraud is over 12,000 pesos but does
not exceed 22,000 pesos; and if such amount exceeds the latter sum, the penalty provided
in this paragraph shall be imposed in its maximum period, adding one year for each
additional 10,000 pesos; but the total penalty which may be imposed shall not exceed
twenty years. In such cases, and in connection with the accessory penalties which may be
imposed and for the purpose of the other provisions of this Code, the penalty shall be
termed prision mayor or reclusion temporal, as the case may be.

The prescribed penalty for estafa under Article 315 of the Revised Penal Code, when the amount
of fraud is over P22,000.00, is prision correccional maximum to prision mayor minimum, adding one
year to the maximum period for each additional P10,000.00, provided that the total penalty shall not
exceed 20 years.

Applying the Indeterminate Sentence Law, we take the minimum term from the penalty next
lower than the minimum prescribed by law, or anywhere within prision correccional minimum and
medium (i.e., from 6 months and 1 day to 4 years and 2 months).[33] Consequently, both the RTC and the
Court of Appeals correctly fixed the minimum term in Criminal Case Nos. 16316-R and 16318-R at 2
years, 11 months, and 10 days of prision correccional; and in Criminal Case No. 16964-R at 4 years and
2 months of prision correccional, since these are within the range of prision correccional minimum and
medium.

As for the maximum term under the Indeterminate Sentence Law, we take the maximum period
of the prescribed penalty, adding 1 year of imprisonment for every P10,000.00 in excess of P22,000.00,
provided that the total penalty shall not exceed 20 years. To compute the maximum period of the
prescribed penalty, the time included in prision correccional maximum to prision mayor minimum shall
be divided into three equal portions, with each portion forming a period. Following this computation, the
maximum period for prision correccional maximum to prision mayor minimum is from 6 years, 8
months, and 21 days to 8 years. The incremental penalty, when proper, shall thus be added to anywhere
from 6 years, 8 months, and 21 days to 8 years, at the discretion of the court.[34]

In computing the incremental penalty, the amount defrauded shall be substracted by P22,000.00,
and the difference shall be divided by P10,000.00. Any fraction of a year shall be discarded as was done
starting with People v. Pabalan.[35]

In Criminal Case Nos. 16316-R and 16318-R, brothers Jeffries and Howard Golidan were each
defrauded of the amount of P40,000.00, for which the Court of Appeals sentenced Ocden to an
indeterminate penalty of 2 years, 11 months, and 10 days of prision correccional as minimum, to 9 years
of prision mayor as maximum. Upon review, however, we modify the maximum term of the
indeterminate penalty imposed on Ocden in said criminal cases. Since the amount defrauded
exceeds P22,000.00 by P18,000.00, 1 year shall be added to the maximum period of the prescribed
penalty (anywhere between 6 years, 8 months, and 21 days to 8 years). There being no aggravating
circumstance, we apply the lowest of the maximum period, which is 6 years, 8 months, and 21
days. Adding the one year incremental penalty, the maximum term of Ocdens indeterminate sentence in
these two cases is only 7 years, 8 months, and 21 days of prision mayor.

In Criminal Cases No. 19694-R, Ferrer was defrauded of the amount of P70,000.00, for which the
Court of Appeals sentenced Ocden to an indeterminate penalty of 4 years and 2 months of prision
correccional, as minimum, to 12 years of prision mayor, as maximum. Upon recomputation, we also have
to modify the maximum term of the indeterminate sentence imposed upon Ocden in Criminal Case No.
19694-R.Given that the amount defrauded exceeds P22,000.00 by P48,000.00, 4 years shall be added to
the maximum period of the prescribed penalty (anywhere between 6 years, 8 months, and 21 days to 8
years). There likewise being no aggravating circumstance in this case, we add the 4 years of incremental
penalty to the lowest of the maximum period, which is 6 years, 8 months, and 21 days. The maximum
term, therefor, of Ocdens indeterminate sentence in Criminal Case No. 19694-R is only 10 years, 8
months, and 21 days of prision mayor.

WHEREFORE, the instant appeal of accused-appellant Dolores Ocden is DENIED. The

Decision dated April 21, 2006 of the Court of Appeals in CA-G.R. CR.-H.C. No.
00044 is AFFIRMED with MODIFICATION to read as follows:

1. In Criminal Case No. 16315-R, the Court finds the accused, Dolores
Ocden, GUILTY beyond reasonable doubt of the crime of Illegal Recruitment committed in large scale
as defined and penalized under Article 13(b) in relation to Articles 38(b), 34 and 39 of the Labor Code, as
amended. She is hereby sentenced to suffer the penalty of life imprisonment and to pay a fine
of P500,000.00;

2. In Criminal Case No. 16316-R, the Court finds the accused, Dolores Ocden, GUILTY beyond
reasonable doubt of the crime of estafa and sentences her to an indeterminate penalty of 2 years, 11
months, and 10 days of prision correccional, as minimum, to 7 years, 8 months, and 21 days of prision
mayor, as maximum, and to indemnify Jeffries Golidan the amount of P40,000.00;

3. In Criminal Case No. 16318-R, the Court finds the accused, Dolores Ocden, GUILTY beyond
reasonable doubt of the crime of estafa and sentences her to an indeterminate penalty of 2 years, 11
months, and 10 days of prision correccional, as minimum, to 7 years, 8 months, and 21 days of prision
mayor, as maximum, and to indemnify Howard Golidan the amount of P40,000.00; and

4. In Criminal Case No. 16964-R, the Court finds the accused, Dolores Ocden, GUILTY beyond
reasonable doubt of the crime of estafa and sentences her to an indeterminate penalty of 4 years and 2
months of prision correccional, as minimum, to 10 years, 8 months, and 21 days of prision mayor, as
maximum, and to indemnify Rizalina Ferrer the amount of P70,000.00.

SO ORDERED.
 Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

PEOPLE OF THE PHILIPPINES, G.R. No. 173792

Plaintiff-Appellee,
Present:

CORONA, C.J.,

Chairperson,

LEONARDO-DE CASTRO,

BERSAMIN,

- versus - DEL CASTILLO, and

VILLARAMA, JR., JJ.

Promulgated:

August 31, 2011

ROSARIO ROSE OCHOA,

Accused-Appellant.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

LEONARDO-DE CASTRO, J.:

For Our consideration is an appeal from the Decision[1] dated March 2, 2006 of the Court of Appeals
in CA-G.R. CR.-H.C. No. 00888, which affirmed with modification the Decision[2] dated April 17, 2000
of the Regional Trial Court (RTC), Quezon City, Branch 104, in Criminal Case Nos. 98-77300 to 98-
77303. The RTC found accused-appellant Rosario Rose Ochoa (Ochoa) guilty of illegal recruitment in
large scale, as defined and penalized under Article II, Section 6 in relation to Section 7(b) of Republic Act
No. 8042, otherwise known as the "Migrant Workers and Overseas Filipinos Act of 1995," in Criminal
Case No. 98-77300; and of the crime of estafa, as defined and penalized in Article 315, paragraph 2(a) of
the Revised Penal Code, in Criminal Case Nos. 98-77301, 98-77302, and 98-77303.

The Information filed before the RTC and docketed as Criminal Case No. 98-77300, charged Ochoa with
illegal recruitment in large scale, allegedly committed as follows:

That on or about the period covering the months of February 1997 up to April
1998 or immediately before or subsequent thereto in Quezon City, Philippines and within
the jurisdiction of this Honorable Court, the above name accused, did then and there
willfully, unlawfully and feloniously recruit Robert Gubat, Junior Agustin, Cesar
Aquino, Richard Luciano, Fernando Rivera, Mariano R. Mislang, Helen B. Palogo,
Joebert Decolongon, Corazon S. Austria, Cristopher A. Bermejo, Letecia D.
Londonio, Alma Borromeo, Francisco Pascual, Raymundo A. Bermejo and
Rosemarie A. Bermejo for a consideration ranging from P2,000.00 to P32,000.00 or a
total amount of P124,000.00 as placement fee which the complainants paid to herein
accused without the accused having secured the necessary license from the Department of
Labor and Employment.[3] (Emphases supplied.)

Three other Informations were filed before the RTC and docketed as Criminal Case Nos. 98-
77301, 98-77302, and 98-77303, this time charging Ochoa with three counts of estafa, committed
separately upon three private complainants Robert Gubat (Gubat), Cesar Aquino (Cesar), and Junior
Agustin (Agustin), respectively. The Information in Criminal Case No. 98-77301 accuses Ochoa of the
following acts constituting estafa:

That on or about March 3, 1998 in Quezon City, Philippines and within the
jurisdiction of this Honorable Court, the above name accused did then and there willfully,
unlawfully and feloniously recruit and promise employment in Taiwan to one ROBERT
GUBAT for a consideration of P18,800.00 as placement fee, knowing that she has no
power, capacity or lawful authority whatsoever and with no intention to fulfill her said
promise, but merely as pretext, scheme or excuse to get and exact money from said
complainant, as she did in fact collect and received the amount of P18,800.00 from said
Robert Gubat, to his damage and prejudice.[4] (Emphases supplied.)
 The two other Informations for estafa were similarly worded as the aforequoted Information,
except as to the name of the private complainants and the amount purportedly collected by Ochoa from
them, particularly:

Docket No. Private Complainant Amount Collected

Criminal Case No. 98-77302[5] Cesar Aquino P19.000.00

Criminal Case No. 98-77303[6] Junior Agustin P32,000.00

As prayed for by the State Prosecutor, all four criminal cases against Ochoa before the RTC were
consolidated. When arraigned, Ochoa pleaded not guilty. Thereafter, joint trial of the four criminal cases
ensued.

The prosecution presented as witnesses Cory Aquino (Cory) of the Philippine Overseas Employment
Agency (POEA) and private complainants Gubat, Agustin, Francisco Pascual (Pascual), Rosemarie
Bermejo (Rosemarie), Cesar, Christopher Bermejo (Christopher), Joebert Decolongon (Decolongon), and
Fernando Rivera (Rivera).

According to private complainants, they were recruited by Ochoa from January to March 1998 for various
jobs in either Taiwan or Saudi Arabia, under the following circumstances:

1. In the second week of February 1998, Ochoa was introduced to Robert Gubat, a licensed electrical
engineer and a resident of Pulang Lupa, Las Pias, through a certain Nila, Gubats neighbor, who had a
pending application for work abroad with Ochoa. Ochoa talked to Gubat on the telephone, and during
their conversation, Ochoa told Gubat that one of her applicants was already leaving for Taiwan. Per
Ochoas instruction, Gubat met with Francisco Pascual, who accompanied him to Ochoas house in San
Bartolome, Novaliches, Quezon City, and personally introduced Gubat to Ochoa. Gubat submitted his
rsum to Ochoa, which Ochoa would bring to Axil International Agency where Ochoa was working as a
recruiter. Right after browsing through Gubats rsum, Ochoa informed Gubat that as an engineer, Gubat
was qualified to work as a factory supervisor and could leave for Taiwan in two weeks or in March
1998. Ochoa also told Gubat that the total application expenses would amount to 100,000.00, and the
downpayment was 50,000.00. Gubat was able to actually pay Ochoa 18,800.00 as reservation fee at the
agency; processing fee for Gubats papers at the Department of Foreign Affairs (DFA), Malacaang, and
Embassy of Taiwan; and medical examination fee. Ochoa, however, only issued to Gubat three receipts,
dated March 3, March 31, and April 6, all in the year 1998, in the amount of P5,000.00 each or a total
of P15,000.00.Gubat started to worry when he was not able to leave for abroad as Ochoa promised and
when she failed to show up at their arranged meetings. When Gubat was finally able to talk to Ochoa,
Ochoa again promised him that he would be leaving for abroad soon. Despite Ochoas renewed promise,
Gubat was still not able to leave the country. Gubat then demanded that Ochoa return his documents and
money. When Ochoa failed to comply with his demand, Gubat filed a report against Ochoa at Barangay
(Brgy.) San Bartolome, Novaliches, Quezon City. On May 21, 1998, he met the other private
complainants[7] who had similar complaints against Ochoa. When nothing came out of the confrontation
with Ochoa at Brgy. San Bartolome, Gubat and the other private complainants filed a joint complaint
against Ochoa before the National Bureau of Investigation (NBI).[8]

2. The paths of Junior Agustin and Ochoa crossed on February 2, 1998. Agustin, a farmer, was staying at
the home of Pascual, his cousin, at No. 4 Gulod, Novaliches, Quezon City. When Ochoa arrived at
Pascuals home, Pascual introduced Ochoa to Agustin as a recruiter for overseas workers
in Taiwan. Interested in working abroad, Agustin submitted his bio-data to Ochoa at the latters residence
at Phase 1, Lot 3, San Bartolome, Novaliches, Quezon City. Ochoa promised Agustin that he would be
fielded as a factory worker in Taiwan for three years, earning a monthly salary of P18,000.00. Ochoa then
informed Agustin that the total placement fee for Taiwan is P80,000.00. Agustin initially paid Ochoa the
sum of P28,000.00 as processing fee. Ochoa then promised that Agustin could leave for Taiwan in two
months. However, the two months passed, but there was still no overseas employment for
Agustin. Agustin was compelled to file a complaint against Ochoa at Brgy. San Bartolome,
Novaliches, Quezon City. Agustin met the other private complainants during the barangay hearing
on May 21, 1998. Ochoa was also present at said hearing.Given the unsuccessful barangay hearing,
Agustin and the other private complainants lodged a complaint against Ochoa before the NBI.[9]

3. Francisco Pascual, presently jobless and a resident of Gulod, Novaliches, Quezon City, learned from a
neighbor of one Mrs. Bermejo that her son was being helped by Ochoa, a recruiter, to find a job
abroad. Pascual went to Mrs. Bermejos house in January 1998, and met Ochoa for the first time. Ochoa
invited Pascual to apply for a job abroad, saying that the latter could leave within two weeks. During
Pascuals visit at Ochoas house at Blk. 1, Lot 1, San Bartolome, Novaliches, Quezon City, Ochoa
promised Pascual employment as a driver salesman in Saudi Arabia, with a monthly salary
of P18,000.00. Ochoa told Pascual that the placement fee would be P7,000.00 and that Pascual should
already have his medical examination so that the position in Saudi Arabia could be reserved for
him. Since his visa had not yet arrived, Pascual did not pay any placement fee to Ochoa. Pascual did
undergo medical examination at St. Peter Medical Clinic in Ermita, Manila, for which he paid P2,600.00
to Ochoa. Pascual though did not receive the results of his medical examination because according to
Ochoa, the same was withheld by the clinic. Despite Ochoas promises, Pascual was not able to leave
for Saudi Arabia. At that time, Pascual was still employed as a Field Coordinator with Selecta, but
because of his frequent absences, spent following-up on his application for work abroad, he was
fired. Pascual filed a complaint against Ochoa at Brgy. San Bartolome, Novaliches, Quezon City. As
nothing happened during the confrontation with Ochoa at the barangay hearing on May 21, 1998, Pascual
and the other private complainants filed a complaint before the NBI.[10]
4. Rosemarie Bermejo came to know of Ochoa through Rivera, a friend of Rosemaries mother. Rosemarie
first met Ochoa at the latters home in Quezon City sometime in January 1998. Rosemarie was promised
by Ochoa employment for three years in Saudi Arabia as clerk/typist, earning US$400.00. Rosemarie was
also instructed by Ochoa to have a medical examination and secure a passport and NBI
clearance. Rosemarie and her brothers, who also applied for jobs abroad, were accompanied by Ochoa to
the St. Peter Medical Clinic in Malate, Manila for their medical examination on February 27,
1998. Rosemarie and her brother each handed over to Ochoa P2,600.00 for their medical examinations,
and it was Ochoa who gave the payment to the clinic. Rosemarie and her brothers then spent P55.00 each
to secure NBI clearances for travel abroad. In addition, Rosemarie gave Ochoa P5,500.00 on April 17,
1998; and although not secured by a receipt, said payment was witnessed by Rosemaries mother and
Imelda Panuga, the landlord of Rosemaries mother, who lent Rosemarie the P5,500.00. During their
initial meeting in January 1998, Ochoa said that Rosemarie could already leave for abroad in two
weeks. Since Rosemarie was not able to complete the requirements, her departure for Saudi Arabia was
moved to April 19, 1998. On April 19, 1998, Ochoa requested Rosemarie to go to the office of Al Arab
Agency located at Jalandoni Building, Ermita, Manila, to which Ochoa was purportedly
connected. Rosemarie waited at the Al Arab Agency until noon, but no one came to pick her up. Later, at
the same day, Ochoa invited Rosemarie to her house for the birthday celebration of her father. There,
Ochoa explained that Rosemarie was unable to leave for Saudi Arabia because the Al Arab Agency has
yet to secure Rosemaries Overseas Employment Certificate (OEC). Ochoa advised Rosemarie to stay at
the rented apartment of Rosemaries mother because it was close to Ochoas house and would be more
convenient as Rosemarie could leave for abroad any day soon. When none of Ochoas promises came to
fruition, Rosemarie, together with the other private complainants, first sought redress from Brgy. San
Bartolome, Novaliches, Quezon City, and then from the NBI.[11]

5. It was Pascual who introduced Cesar Aquino, a resident of Cubao, to Ochoa at the latters residence in
San Bartolome, Novaliches, Quezon City, sometime in February 1998. When Cesar directly asked Ochoa
if she was a recruiter, the latter answered in the affirmative. Cesar applied to work as a factory worker
in Taiwan. Ochoa told Cesar that as a factory worker, he could earn at least P15,000.00 a month. On
March 13, 1998, Cesar handed over P17,000.00 to Ochoa to cover his processing fee and medical
examination. On the same day, Cesar had his medical examination at St. Peter Medical Clinic. Ochoa then
promised that Cesar could leave two weeks thereafter. When two weeks had passed and he was not able
to leave for Taiwan, Cesar demanded that Ochoa return his money. Ochoa failed to comply with Cesars
demand, and Cesar instituted a complaint against Ochoa at Brgy. San Bartolome, Novaliches, Quezon
City. At the hearing attended by Ochoa, Cesar, and the other private complainants before the Barangay
Lupon, Ochoa signed a Kasunduan, agreeing to return the money to private complainants. Again, Ochoa
failed to fulfill her promise to return the money paid by Cesar, thus, the latter, together with the other
complainants, filed a complaint with the NBI.[12]
6. Christopher Bermejo met Ochoa at the house of his mother in Novaliches, Quezon City in January
1998. Also present at the house were Fernando Bermejo, Christophers brother, and Richard
Luciano. Ochoa promised that after a week, Christopher would already be deployed to Saudi Arabia as an
accountant, earning 250-350 Saudi Riyals. As a result, Christopher immediately resigned from his job at
the Development Bank of the Philippines (DBP). Christophers mother paid Ochoa P5,000.00 as
processing fee for Christophers application. A week passed and Ochoa failed to send Christopher to Saudi
Arabia for work. When Rosemarie and Raymundo Bermejo (Raymundo), Christophers sister and brother,
respectively, also failed to leave for work abroad as promised by Ochoa, Christopher, Rosemarie, and
their mother went to see Ochoa at an office at the Jalandoni Building, Ermita, Manila. Ochoa explained
that Christopher and his siblings could not leave yet because there are other documents that still need to
be accomplished. Ochoa said that she would just notify Christopher and his siblings of their scheduled
departure. When they still did not receive any notification from Ochoa, Rosemarie, Raymundo, and their
mother returned to the office at the Jalandoni Building and found out that their placement fees were not
given to said office. Christopher joined the other private complainants in filing a complaint against Ochoa
before the NBI.[13]

7. Joebert Decolongon is a resident of Sta. Maxima, Gulod, Novaliches, Quezon City, and works as a bus
conductor. Decolongon was introduced to Ochoa by Rivera, Decolongons friend, at Riveras house
on Villareal Street, Gulod, Novaliches. Ochoa informed Decolongon that there was a vacancy for the
position of janitor in Saudi Arabia, with a monthly salary of 800 Saudi Riyals. Decolongon submitted his
application, birth certificate, and passport to Ochoa. Ochoa also went to Decolongons house and collected
from Decolongons wife the initial amount of P2,000.00 as placement fee. The rest of Decolongons
placement fees would be paid by one-month salary deduction. Trusting Ochoa, neither Decolongon nor
his wife demanded a receipt. When Ochoa failed to deploy Decolongon for employment abroad,
Decolongon too filed a complaint against Ochoa before Brgy. San Bartolome, Novaliches, Quezon
City. Without a successful resolution at the barangay level, Decolongon joined the private complainants
in filing a complaint against Ochoa before the NBI.[14]

8. Sometime in January 1998, Ochoa was accompanied by a certain Amy to Fernando Riveras residence
at 27 Villareal Street, Novaliches, Quezon City. Ochoa first talked to Riveras mother who had previously
worked abroad. Ochoa then also offered work to Rivera, either as tea boy or janitor in the army
in Riyadh, Saudi Arabia. Rivera chose to work as a tea boy, with a salary of 800 to 1,000 Saudi
Riyals. Ochoa said that Rivera would be deployed in the first week of February 1998. Ochoa required
Rivera to submit NBI clearance, passport, and pictures, but Rivera submitted only his NBI clearance. In
January 1998, Rivera paid Ochoa P2,000.00 as she would be the one to secure Riveras passport. In March
1998, Rivera handed over his ring and necklace, worth of P10,000.00, to Ochoa to cover his processing
and medical examination fees. Rivera did not require a receipt from Ochoa because he trusted Ochoa,
who was his mothers friend. When Rivera failed to leave in February 1998, Ochoa explained that Riveras
departure was postponed until March 1998 due to Ramadan. After the period of Ramadan, Rivera was
still not able to leave for Saudi Arabia.Rivera then filed a complaint against Ochoa before Brgy. San
Bartolome, Novaliches, Quezon City. Ochoa promised to return to Rivera his jewelries and P2,000.00,
but Ochoa did not appear at the barangay hearing set on April 30, 1998. Thus, Rivera and the other
private complainants proceeded to file a complaint against Ochoa before the NBI. [15]

Cory C. Aquino of the POEA authenticated the Certification dated June 3, 1998, issued by Hermogenes
C. Mateo (Mateo), Director, Licensing Branch of the POEA, that Ochoa, in her personal capacity, is
neither licensed nor authorized by the POEA to recruit workers for overseas employment. Cory identified
Director Mateos signature on the Certification, being familiar with the same. The Certification was issued
after a check of the POEA records pursuant to a request for certification from the NBI. Cory, however,
admitted that she did not participate in the preparation of the Certification, as the NBIs request for
certification was through a counter transaction, and another person was in charge of verification of
counter transactions.[16]

Ochoa testified on her own behalf.

Ochoa stated under oath that she was employed by AXIL International Services and Consultant (AXIL)
as recruiter on December 20, 1997. AXIL had a temporary license to recruit Filipino workers for overseas
employment. Ochoa worked at AXIL from 8:00 a.m. to 5:00 p.m. and was paid on a commission
basis. She admitted recruiting private complainants and receiving from them the following amounts as
placement and medical fees:

Private Complainant Amounts Collected

Robert Gubat P18,000.00 for placement and medical fees[17]
Junior Agustin
Francisco Pascual
Rosemarie Bermejo
Cesar Aquino
Christopher Bermejo
Joebert Decolongon
Fernando Rivera
P22,000.00 for placement and medical fees[18]
P 2,000.00 for medical fee[19]
P 2,600.00 for medical fee[20]
P 19,000.00 for placement and medical fees[21]
P 2,600.00 for medical fee[22]
P 6,000.00 for medical fee[23]
P 2,000.00 for medical fee[24]

Ochoa claimed though that she remitted private complainants money to a person named Mercy, the
manager of AXIL, but AXIL failed to issue receipts because the private complainants did not pay in
full.[25]

On April 17, 2000, the RTC rendered a Decision finding Ochoa guilty beyond reasonable doubt of the
crimes of illegal recruitment in large scale (Criminal Case No. 98-77300) and three counts of estafa
(Criminal Case Nos. 98-77301, 98-77302, 98-77303). The dispositive portion of said Decision reads:
WHEREFORE, judgment is hereby rendered as follows:

1. In Criminal Case No. 98-77300, the Court finds the accused, ROSARIO
ROSE OCHOA, guilty beyond reasonable doubt as principal of ILLEGAL
RECRUITMENT IN LARGE SCALE, defined and penalized in Section 6 in relation to
Section 7 (b) of Republic Act No. 8042, and sentences her to life imprisonment and a fine
of One Million Pesos.

2. In Criminal Case No. 98-77301, the Court finds the accused, ROSARIO
ROSE OCHOA, guilty beyond reasonable doubt as principal of the crime of ESTAFA,
defined and penalized in Article 315, paragraph 2 (a) of the Revised Penal Code, and
sentences her to an indeterminate penalty of two (2) years, eleven (11) months and eleven
(11) days of prision correccional as minimum to six (6) years, eight (8) months and
twenty (20) days of prision mayor, as maximum, and to indemnify complainant Robert
Gubat in the amount of Eighteen Thousand Eight Hundred (P18,800.00) Pesos.

3. In Criminal Case No. 98-77302, the Court finds the accused, ROSARIO
ROSE OCHOA, guilty beyond reasonable doubt as principal of the crime of ESTAFA,
defined and penalized in Article 315, paragraph 2 (a) of the Revised Penal Code, and
sentences her to an indeterminate penalty of two (2) years, eleven (11) months and eleven
(11) days of prision correccional as minimum to six (6) years, eight (8) months and
twenty (20) days of prision mayor as maximum, and to indemnify the complainant Cesar
Aquino in the amount of Seventeen Thousand (P17,000.00) Pesos.

4. In Criminal Case No. 98-77303, the Court finds the accused, ROSARIO
ROSE OCHOA, guilty beyond reasonable doubt as principal of the crime of ESTAFA,
defined and penalized in Article 315, paragraph 2 (a) of the Revised Penal Code, and
sentences her to an indeterminate penalty of two (2) years, eleven (11) months and eleven
(11) days of prision correccional as minimum to six (6) years, eight (8) months and
 twenty-one (21) days of prision mayor as maximum, and to indemnify complainant
Junior Agustin in the amount of Twenty-Eight Thousand (P28,000.00) Pesos.[26]

Ochoa filed a Notice of Appeal[27] in which she stated her intention to appeal the RTC judgment
of conviction and prayed that the records of her case be forwarded to the Court of Appeals. Ochoas appeal
was docketed as CA-G.R. CR. No. 24147 before the Court of Appeals.

In a Resolution[28] dated August 8, 2000, the Court of Appeals granted Ochoas First Motion for
Extension of Time to file her brief.

Ochoa filed her Appellants Brief on September 4, 2000[29] while the People, through the Office of
the Solicitor General (OSG), filed its Appellees Brief on March 1, 2001.[30]

The Special Fourteenth Division of the Court of Appeals promulgated its Decision[31] dated June
17, 2002 affirming the appealed RTC decision dated April 17, 2000. Ochoa filed a Motion for
Reconsideration,[32] which the People opposed for being bereft of merit.[33]

In its Resolution[34] dated August 6, 2003, the Court of Appeals declared that it had no
jurisdiction over Ochoas appeal, ratiocinating thus:

We affirmed this judgment on 17 June 2002. While neither the accused-appellant

nor the Office of the Solicitor General representing the people ever raised the issue of
jurisdiction, our second look at the suit proved worthwhile because we came to realize
that we mistakenly assumed jurisdiction over this case where it does not obtain.

It was error to consider accused-appellants appeal from a trial court judgment

imposing life imprisonment in Criminal Case No. Q-98-77300 for illegal recruitment in a
large scale. Consequently, the judgment we rendered dated 17 June 2002 is null and
void. No less than Article VIII, 5(2)(d) of the Constitution proscribes us from taking
jurisdiction

SECTION 5. The Supreme Court shall have the following

powers:

xxxx

(2) Review, revise, reverse, modify or affirm on appeal or certiorari as

the law or Rules of Court may provide, final judgments and orders of the
lower court in:

xxxx
(d) All criminal cases in which the penalty imposed is reclusion perpetua
or higher

17(1) of the Judiciary Act of 1948 reiterates

 SECTION 17. Jurisdiction of the Supreme Court.

The Supreme Court shall have exclusive jurisdiction to review, revise,

reverse, modify or affirm on appeal, as the law or rules of court may
provide, final judgments and decrees of inferior courts as herein
provided, in

(1) All criminal cases involving offenses for which the

penalty imposed is life imprisonment; and those involving offenses
which, although not so punished, arose out of the same occurrences or
which may have been committed by the accused on the same occasion as
that giving rise to the more serious offense, regardless of whether the
accused are charged as principals, accomplices, or accessories, or
whether they have been tried jointly or separately; x x x.

3 of Rule 122 of the Revised Rules of Criminal Procedure likewise declares

SEC. 3. How appeal taken.

(c) The appeal to the Supreme Court in cases where the penalty imposed
by the Regional Trial Court is reclusion perpetua or life imprisonment,
or where a lesser penalty is imposed but for offenses committed on the
same occasion or which arose out of the same occurrence that gave rise
to the more serious offense for which the penalty of death, reclusion
perpetua, or life imprisonment is impose[d], shall be by filing a notice of
appeal in accordance with paragraph (a) of this section.

Even if only in Criminal Case No. Q-98-77300 was the penalty of life
imprisonment meted out, we still cannot consider the appeal of the verdict in Criminal
Case Nos. 98-77301 to 98-77303 for as the Supreme Court clearly clarified

An appeal of a single decision cannot be split between two

courts. The splitting of appeals is not conclusive to the orderly
administration of justice and invites possible conflict of dispositions
between the reviewing courts. Specifically, the Court of Appeals has no
jurisdiction to review an appeal of a judgment imposing an indeterminate
sentence, if the same ruling also imposes reclusion perpetua, life
imprisonment and death for crimes arising out of the same facts. In other
words, the Supreme Court has exclusive jurisdiction over appeals of
criminal cases in which the penalty imposed below is reclusion perpetua,
life imprisonment or death, even if the same decision orders, in addition,
a lesser penalty or penalties for crimes arising out of the same occurrence
or facts.
 It will be seen that Robert Gubat, private complainant in Criminal Case No. Q-
98-77301, Cesar Aquino, private complainant in Criminal Case No. Q-98-77302 and
Junior Agustin, private complainant in Criminal Case No. Q-98-77303 were also the
private complainant in the illegal recruitment in a large scale suit, docketed as Criminal
Case No. Q-98-77300. As gleaned from the charges, the estafa cases were intimately
related to or arose from the facts and occurrences of the alleged illegal
recruitment. Clearly, we have no recourse but to refuse cognizance over the estafa cases
as well.[35]

Despite its lack of jurisdiction over Ochoas appeal, the Court of Appeals did not dismiss the same and
merely ordered its transfer to us:

While the Supreme Court Circular No. 2-90 directs the dismissal of appeals filed
before the wrong court, the Supreme Court has in practice allowed the transfer of records
from this Court to the highest court. In which case, we shall subscribe to this practice in
the interest of substantial justice.

WHEREFORE, premises considered, our decision is declared NULL and

VOID. We order the TRANSFER of the records of Criminal Cases Nos. 98-77300 to 98-
77303 to the Supreme Court for proper action.[36]

In the Resolution[37] dated September 17, 2003, we accepted Ochoas appeal and informed both
Ochoa and the OSG to file their respective additional briefs. Ochoas appeal was then docketed as G.R.
No. 159252.

On August 17, 2004, Ochoas counsel filed an explanation stating that he had nothing more to add
since he had already written and filed all necessary pleadings, complete with all the necessary research
and arguments.[38]

In the meantime, People v. Mateo[39] was promulgated on July 7, 2004, where we held that an
appeal from the decisions of the RTC, sentencing the accused to life imprisonment or reclusion perpetua,
should be made to the Court of Appeals. Thus, in our Resolution[40] dated March 11, 2005, the Court
ordered the transfer of the records of G.R. No. 159252 to the Court of Appeals for a decision on the
merit. We likewise directed the Court of Appeals to raffle the said case to any of its regular divisions.

When Ochoas appeal was before the Court of Appeals a second time, it was docketed as CA-G.R.
CR.-H.C. No. 00888. The Court of Appeals, in a Decision dated March 2, 2006, affirmed with
modification the RTC Decision dated April 17, 2000. The appellate court essentially affirmed the findings
of fact and law of the RTC, but reduced the award of damages in Criminal Case No. 98-77301 and
increased the prison sentence in Criminal Case No. 98-77303. The decretal portion of said Decision reads:

WHEREFORE, judgment is hereby rendered as follows:

l. The judgment of the trial court in Criminal Case No. 98-77300 finding
appellant Rosario Ochoa guilty beyond reasonable doubt of Illegal Recruitment in Large
 Scale constituting economic sabotage under Sec. 6 (l) and (m) in relation to Sec. 7(b) of
R.A. No. 8042 and sentencing her to life imprisonment and a fine of One Million Pesos
(P1,000,000.00) is AFFIRMED.

ll. The judgment in Criminal Case No. 98-77301, finding appellant guilty beyond
reasonable doubt of estafa is MODIFIED. Appellant is, hereby, ordered to indemnify
Robert Gubat in the amount of P15,000.00 only as and by way of actual damages.

lll. The judgment in Criminal Case No. 98-77302, finding appellant guilty
beyond reasonable doubt of estafa is AFFIRMED.

IV. The judgment in Criminal Case No. 98-77303, finding appellant guilty
beyond reasonable doubt of estafa is MODIFIED. Appellant is, hereby, sentenced to an
indeterminate penalty of FOUR (4) YEARS and TWO (2) MONTHS of prision
correccional as minimum, to EIGHT (8) YEARS OF prision mayor as maximum.[41]

Ochoas appeal is anchored on the following assignment of errors:

The lower court erred:

a. In admitting Exhibit A the POEA Certification when it was already

excluded during the bail hearing

b. In shifting the burden of the accused to prove that there was no

illegal recruitment

c. In finding that there was estafa

d. By not limiting liability of the accused to civil liability only[42]

We find no reversible error in the assailed Court of Appeals decision.

Illegal recruitment in large scale

Ochoa was charged with violation of Section 6 of Republic Act No. 8042. Said provision broadens the
concept of illegal recruitment under the Labor Code[43] and provides stiffer penalties, especially for those
that constitute economic sabotage, i.e., illegal recruitment in large scale and illegal recruitment committed
by a syndicate.

Section 6 of Republic Act No. 8042 defines illegal recruitment as follows:

SEC. 6. Definition. - For purposes of this Act, illegal recruitment shall mean any
act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring
workers and includes referring, contract services, promising or advertising for
employment abroad, whether for profit or not, when undertaken by a non-licensee or non-
holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as
amended, otherwise known as the Labor Code of the Philippines: Provided, That any
such non-licensee or non-holder who, in any manner, offers or promises for a fee
employment abroad to two or more persons shall be deemed so engaged. It shall likewise
include the following acts, whether committed by any person, whether a non-licensee,
non-holder, licensee or holder of authority:

xxxx

(m) Failure to reimburse expenses incurred by the worker in connection with his
documentation and processing for purposes of deployment, in cases where the
deployment does not actually take place without the worker's fault. Illegal recruitment
when committed by a syndicate or in large scale shall be considered an offense involving
economic sabotage.

Illegal recruitment is deemed committed by a syndicate if carried out by a group

of three (3) or more persons conspiring or confederating with one another. It is deemed
committed in large scale if committed against three (3) or more persons individually or as
a group.
 It is well-settled that to prove illegal recruitment, it must be shown that appellant gave
complainants the distinct impression that she had the power or ability to send complainants abroad for
work such that the latter were convinced to part with their money in order to be employed.[44]All eight
private complainants herein consistently declared that Ochoa offered and promised them employment
overseas. Ochoa required private complainants to submit their bio-data, birth certificates, and passports,
which private complainants did. Private complainants also gave various amounts to Ochoa as payment for
placement and medical fees as evidenced by the receipts Ochoa issued to Gubat,[45] Cesar,[46] and
Agustin.[47]Despite private complainants compliance with all the requirements Ochoa specified, they were
not able to leave for work abroad. Private complainants pleaded that Ochoa return their hard-earned
money, but Ochoa failed to do so.

Ochoa contends that Exhibit A, the POEA certification which states that Ochoa, in her personal
capacity, is neither licensed nor authorized to recruit workers for overseas employment was already
rejected by the RTC during the hearings on bail for being hearsay, and should not have been admitted by
the RTC after the trial on the merits of the criminal cases. Inadmissible evidence during bail hearings do
not become admissible evidence after formal offer. Without the POEA certification, the prosecution had
no proof that Ochoa is unlicensed to recruit and, thus, she should be acquitted.

Ochoas contention is without merit.

We refer to the following ruling in Fullero v. People,[48] wherein we rejected a similar argument
raised by petitioner therein against a certification issued by an officer of the Professional Regulation
Commission:

Regarding the third issue, petitioner contended that the prosecution's

documentary evidence, consisting of Exhibits A, C, F, G, H, I, J, K, L, M, N, O, P, Q and
R and their sub-markings, are inadmissible in evidence based on the following reasons:

(1) Exhibit A, which is the Certification of the PRC dated 17 January 1998,
confirming that petitioner's name does not appear in the registry books of licensed civil
engineers, was not properly identified during the trial. The proper person to identify the
certification should have been the signatory therein which was PRC Director II Jose A.
 Arriola, or in his absence, a person who actually witnessed the execution of the
certification. Prosecution witness Atayza, who was not present when the certification was
executed, had identified the certification during the trial. Thus, the contents of the
certification are mere hearsay; x x x.

xxxx

Section 36, Rule 130 of the Revised Rules on Evidence, states that a witness can
testify only to those facts which he knows of or comes from his personal knowledge, that
is, which are derived from his perception. A witness, therefore, may not testify as to what
he merely learned from others either because he was told, or he read or heard the same.
Such testimony is considered hearsay and may not be received as proof of the truth of
what he has learned. This is known as the hearsay rule.

The law, however, provides for specific exceptions to the hearsay rule. One of
the exceptions is the entries in official records made in the performance of duty by a
public officer. In other words, official entries are admissible in evidence regardless of
whether the officer or person who made them was presented and testified in court, since
these entries are considered prima facie evidence of the facts stated therein. Other
recognized reasons for this exception are necessity and trustworthiness. The necessity
consists in the inconvenience and difficulty of requiring the official's attendance as a
witness to testify to innumerable transactions in the course of his duty. This will also
unduly hamper public business. The trustworthiness consists in the presumption of
regularity of performance of official duty by a public officer.

Exhibit A, or the Certification of the PRC dated 17 January 1998, was signed by
Arriola, Director II of the PRC, Manila. Although Arriola was not presented in court or
did not testify during the trial to verify the said certification, such certification is
considered as prima facie evidence of the facts stated therein and is therefore presumed to
be truthful, because petitioner did not present any plausible proof to rebut its truthfulness.
Exhibit A is therefore admissible in evidence.[49]

In the case at bar, the POEA certification was signed by Dir. Mateo of the POEA Licensing
Branch. Although Dir. Mateo himself did not testify before the RTC, the prosecution still presented Cory,
Dir. Mateos subordinate at the POEA Licensing Branch, to verify Dir. Mateos signature.
 Also worth re-stating is the justification provided by the Court of Appeals for the admissibility of
the POEA certification, viz:

The certificate is admissible. It is true that the trial court, during the bail hearings,
rejected the certification for being hearsay because at that stage of the proceedings,
nobody testified yet on the document. However, as the trial progressed, an officer of the
POEA, specifically in its licensing branch, had testified on the document. It does not
follow, then, as appellant would want this court to assume, that evidence rejected during
bail hearings could not be admissible during the formal offer of evidence.

This court admits that Ms. Cory Aquino was not the signatory of the
document. Nevertheless, she could testify on the veracity of the document because she is
one of the officers of the licensing branch of the POEA. Being so, she could testify
whether a certain person holds a license or not. It bears stressing that Ms. Aquino is
familiar with the signature of Mr. Mateo because the latter is her superior. Moreover, as
testified to by Ms. Aquino, that as a policy in her office, before a certification is made,
the office checks first whether the name of the person requested to be verified is a
reported personnel of any licensed agency by checking their index and computer files.

As found in the offices records, appellant, in her personal capacity, is neither

licensed nor authorized to recruit workers for overseas employment. It bears stressing,
too, that this is not a case where a certification is rendered inadmissible because the one
who prepared it was not presented during the trial. To reiterate, an officer of the licensing
branch of the POEA, in the person of Ms. Aquino, testified on the document. Hence, its
execution could be properly determined and the veracity of the statements stated therein
could be ascertained.[50]

More importantly, Ochoa could still be convicted of illegal recruitment even if we disregard the
POEA certification, for regardless of whether or not Ochoa was a licensee or holder of authority, she
could still have committed illegal recruitment. Section 6 of Republic Act No. 8042 clearly provides that
any person, whether a non-licensee, non-holder, licensee or holder of authority may be held liable for
illegal recruitment for certain acts as enumerated in paragraphs (a) to (m) thereof. Among such acts, under
Section 6(m) of Republic Act No. 8042, is the [f]ailure to reimburse expenses incurred by the worker in
connection with his documentation and processing for purposes of deployment, in cases where the
deployment does not actually take place without the workers fault. Ochoa committed illegal recruitment
as described in the said provision by receiving placement and medical fees from private complainants,
evidenced by the receipts issued by her, and failing to reimburse the private complainants the amounts
they had paid when they were not able to leave for Taiwan and Saudi Arabia, through no fault of their
own.

Ochoa further argues in her defense that she should not be found personally and criminally liable
for illegal recruitment because she was a mere employee of AXIL and that she had turned over the money
she received from private complainants to AXIL.

We are not convinced. Ochoas claim was not supported by any corroborating evidence. The
POEA verification dated September 23, 1998, also signed by Dir. Mateo, and presented by Ochoa during
trial, pertains only to the status of AXIL as a placement agency with a limited temporary authority which
had already expired. Said verification did not show whether or not Ochoa was employed by
AXIL. Strangely, for an alleged employee of AXIL, Ochoa was not able to present the most basic
evidence of employment, such as appointment papers, identification card (ID), and/or payslips. The
receipts presented by some of the private complainants were issued and signed by Ochoa herself, and did
not contain any indication that Ochoa issued and signed the same on behalf of AXIL. Also, Ochoa was
not able to present any proof that private complainants money were actually turned over to or received by
AXIL.

There is no reason for us to disturb the weight and credence accorded by the RTC to the evidence
of the prosecution, over that of the defense. As is well-settled in this jurisdiction, greater weight is given
to the positive identification of the accused by the prosecution witnesses than the accuseds denial and
explanation concerning the commission of the crime.[51] Likewise, factual findings of the trial courts,
including their assessment of the witnesses credibility, are entitled to great weight and respect by the
Supreme Court, particularly when the Court of Appeals affirmed such findings. After all, the trial court is
in the best position to determine the value and weight of the testimonies of witnesses.The absence of any
showing that the trial court plainly overlooked certain facts of substance and value that, if considered,
might affect the result of the case, or that its assessment was arbitrary, impels the Court to defer to the
trial courts determination according credibility to the prosecution evidence. [52] Moreover, in the absence
of any evidence that the prosecution witnesses were motivated by improper motives, the trial courts
assessment of the credibility of the witnesses shall not be interfered with by this Court.[53]

Under the last paragraph of Section 6 of Republic Act No. 8042, illegal recruitment shall be
considered an offense involving economic sabotage if committed in a large scale, that is, committed
against three or more persons individually or as a group. Here, there are eight private complainants who
convincingly testified on Ochoas acts of illegal recruitment.

In view of the overwhelming evidence presented by the prosecution, we uphold the verdict of the
RTC, as affirmed by the Court of Appeals, that Ochoa is guilty of illegal recruitment constituting
economic sabotage.

Section 7(b) of Republic Act No. 8042 provides that the penalty of life imprisonment and a fine
of not less than P500,000.00 nor more than P1,000.000.00 shall be imposed when the illegal recruitment
constitutes economic sabotage. Thus:

Sec. 7. Penalties.

(a) Any person found guilty of illegal recruitment shall suffer the penalty of
imprisonment of not less than six (6) years and one (1) day but not more than twelve (12)
years and a fine of not less than Two hundred thousand pesos (P200,000.00) nor more
than Five hundred thousand pesos (P500,000.00).

(b) The penalty of life imprisonment and a fine of not less than Five hundred thousand
pesos (P500,000.00) nor more than One million pesos (P1,000,000.00) shall be imposed
if illegal recruitment constitutes economic sabotage as defined herein.
 Since the penalty of life imprisonment and a fine of P1,000,000.00 imposed on Ochoa by the
RTC, and affirmed by the Court of Appeals, are in accord with the law, we similarly sustain the same.

Estafa

We affirm as well the conviction of Ochoa for estafa committed against three private
complainants in Criminal Case Nos. 98-77301, 98-77302, and 98-77303. The very same evidence proving
Ochoas criminal liability for illegal recruitment also established her criminal liability for estafa.

It is settled that a person may be charged and convicted separately of illegal recruitment under
Republic Act No. 8042, in relation to the Labor Code, and estafa under Article 315, paragraph 2(a) of the
Revised Penal Code. We explicated in People v. Cortez and Yabut[54] that:

In this jurisdiction, it is settled that a person who commits illegal recruitment

may be charged and convicted separately of illegal recruitment under the Labor Code and
estafa under par. 2(a) of Art. 315 of the Revised Penal Code. The offense of illegal
recruitment is malum prohibitum where the criminal intent of the accused is not
necessary for conviction, while estafa is malum in se where the criminal intent of the
accused is crucial for conviction. Conviction for offenses under the Labor Code does not
bar conviction for offenses punishable by other laws. Conversely, conviction for estafa
under par. 2(a) of Art. 315 of the Revised Penal Code does not bar a conviction for illegal
recruitment under the Labor Code. It follows that ones acquittal of the crime of estafa
will not necessarily result in his acquittal of the crime of illegal recruitment in large scale,
and vice versa.[55]

Article 315, paragraph 2(a) of the Revised Penal Code defines estafa as:

Art. 315. Swindling (estafa). - Any person who shall defraud another by any of the means
mentioned hereinbelow x x x:

xxxx

2. By means of any of the following false pretenses or fraudulent acts executed prior to or
simultaneously with the commission of the fraud:

(a) By using fictitious name, or falsely pretending to possess power, influence,

qualifications, property, credit, agency, business or imaginary transactions; or by means
of other similar deceits.
 The elements of estafa are: (a) that the accused defrauded another by abuse of confidence or by
means of deceit, and (b) that damage or prejudice capable of pecuniary estimation is caused to the
offended party or third person.[56] Both elements are present in Criminal Case Nos. 98-77301, 98-77302,
and 98-77303. Ochoas deceit was evident in her false representation to private complainants Gubat,
Cesar, and Agustin that she possessed the authority and capability to send said private complainants to
Taiwan/Saudi Arabia for employment as early as one to two weeks from completion of the requirements,
among which were the payment of placement fees and submission of a medical examination
report. Ochoa promised that there were already existing job vacancies overseas for private complainants,
even quoting the corresponding salaries. Ochoa carried on the deceit by receiving application documents
from the private complainants, accompanying them to the clinic for medical examination, and/or making
them go to the offices of certain recruitment/placement agencies to which Ochoa had actually no
connection at all. Clearly deceived by Ochoas words and actions, private complainants Gubat, Cesar, and
Aquino were persuaded to hand over their money to Ochoa to pay for their placement and medical
fees. Sadly, private complainants Gubat, Cesar, and Aquino were never able to leave for work abroad, nor
recover their money.

The penalty for estafa depends on the amount of defraudation. According to Article 315 of the
Revised Penal Code:

Art. 315. Swindling (estafa). Any person who shall defraud another by any of the
means mentioned hereinbelow shall be punished by:

1st. The penalty of prision correccional in its maximum period to prision

mayor in its minimum period, if the amount of the fraud is over 12,000 pesos but does
not exceed 22,000 pesos, and if such amount exceeds the latter sum, the penalty provided
in this paragraph shall be imposed in its maximum period, adding one year for each
additional 10,000 pesos; but the total penalty which may be imposed shall not exceed
twenty years. In such cases, and in connection with the accessory penalties which may be
imposed under the provisions of this Code, the penalty shall be termed prision
mayor or reclusion temporal, as the case may be.
 It was established by evidence that in Criminal Case No. 98-77301, Gubat was defrauded by
Ochoa in the amount of P15,000.00; in Criminal Case No. 77-98302, Cesar paid Ochoa the sum
of P17,000.00; and in Criminal Case No. 77-98303, Agustin handed over to Ochoa a total of P28,000.00.

The prescribed penalty for estafa under Article 315 of the Revised Penal Code, when the amount
of the fraud is over P12,000.00 but not exceeding P22,000.00, is prision correccional maximum
to prision mayor minimum (i.e., from 4 years, 2 months and 1 day to 8 years). If the amount of fraud
exceeds P22,000.00, the aforementioned penalty shall be imposed in its maximum period, adding one
year for each additional P10,000.00, provided that the total penalty shall not exceed 20 years.

Under the Indeterminate Sentence Law, the minimum term shall be within the range of the
penalty next lower to that prescribed by the Revised Penal Code, or anywhere within prision
correccional minimum and medium (i.e., from 6 months and 1 day to 4 years and 2
months).[57]Consequently, the minimum terms in Criminal Case Nos. 98-77301 and 98-77302 were
correctly fixed by the RTC and affirmed by the Court of Appeals at 2 years, 11 months, and 11 days
of prision correccional. While the minimum term in Criminal Case No. 98-77303 was increased by the
Court of Appeals to 4 years and 2 months of prision correccional, it is still within the range of the penalty
next lower to that prescribed by Section 315 of the Revised Penal Code.

The maximum term under the Indeterminate Sentence Law shall be that which, in view of
attending circumstances, could be properly imposed under the rules of the Revised Penal Code. To
compute the minimum, medium, and maximum periods of the prescribed penalty for estafa when the
amount of fraud exceeds P12,000.00, the time included in prision correccional maximum to prision
mayor minimum shall be divided into three equal portions, with each portion forming a period. Following
this computation, the minimum period for prision correccional maximum to prision mayor minimum is
from 4 years, 2 months, and 1 day to 5 years, 5 months, and 10 days; the medium period is from 5 years,
5 months, and 11 days to 6 years, 8 months, and 20 days; and the maximum period is from 6 years, 8
months, and 21 days to 8 years. Any incremental penalty (i.e., 1 year for every P10,000.00 in excess
of P22,000.) shall thus be added to anywhere from 6 years, 8 months, and 21 days to 8 years, at the
discretion of the court, provided that the total penalty does not exceed 20 years.[58]
 In Criminal Case Nos. 98-77301 and 98-77302, the amounts of fraud were more than P12,00.00
but not exceeding P22,000.00, and in the absence of any mitigating or aggravating circumstance, the
maximum term shall be taken from the medium period of the penalty prescribed (i.e., 5 years, 5 months,
and 11 days to 6 years, 8 months, and 20 days). Thus, the maximum terms of 6 years, 8 months, and 20
days actually imposed by the RTC and affirmed by the Court of Appeals in Criminal Case Nos. 98-77301
and 98-77302 are proper.

As for determining the maximum term in Criminal Case No. 98-77303, we take into
consideration that the amount of fraud was P28,000.00. Since the amount of fraud exceeded P22,000.00,
the maximum term shall be taken from the maximum period of the prescribed penalty, which is 6 years, 8
months, and 21 days to 8 years; but since the amount of fraud exceeded P22,000.00 by only P6,000.00
(less than P10,000.00), no incremental penalty shall be imposed. Considering that the maximum term of 8
years fixed by the Court of Appeals in Criminal Case No. 98-77303 is within the maximum period of the
proscribed penalty, we see no reason for disturbing the same.

WHEREFORE, we DENY the present appeal for lack of merit and AFFIRM the Decision
dated March 2, 2006 of the Court of Appeals in CA-G.R. CR.-H.C. No. 00888, affirming with
modification the Decision dated April 17, 2000 of the Regional Trial Court, Quezon City, Branch 104, in
Criminal Case Nos. 98-77300 to 98-77303, to read as follows:

1. In Criminal Case No. 98-77300, accused-appellant Rosario Rose Ochoa is

found GUILTY beyond reasonable doubt of illegal recruitment in large scale, constituting economic
sabotage, as defined and penalized in Section 6(l) and (m), in relation to Section 7(b), of Republic Act
No. 8042, and is sentenced to life imprisonment and a fine of One Million Pesos (P1,000.000.00);

2. In Criminal Case No. 98-77301, accused-appellant Rosario Rose Ochoa is

found GUILTY beyond reasonable doubt of the crime of estafa, as defined and penalized in Article 315,
paragraph 2(a) of the Revised Penal Code, and is sentenced to an indeterminate penalty of two (2) years,
eleven (11) months, and eleven (11) days of prision correccional, as minimum, to six (6) years, eight (8)
months, and twenty (20) days of prision mayor, as maximum, and to indemnify private complainant
Robert Gubat in the amount of Fifteen Thousand Pesos (P15,000.00) as actual damages;

3. In Criminal Case No. 98-77302, accused-appellant Rosario Rose Ochoa is

found GUILTY beyond reasonable doubt of the crime of estafa, as defined and penalized in Article 315,
paragraph 2(a) of the Revised Penal Code, and is sentenced to an indeterminate penalty of two (2) years,
eleven (11) months, and eleven (11) days of prision correccional, as minimum, to six (6) years, eight (8)
months, and twenty (20) days of prision mayor, as maximum, and to indemnify private complainant
Cesar Aquino in the amount of Seventeen Thousand Pesos (P17,000.00); and
 4. In Criminal Case No. 98-77303, accused-appellant Rosario Rose Ochoa is
found GUILTY beyond reasonable doubt of the crime of estafa, as defined and penalized in Article 315,
paragraph 2(a) of the Revised Penal Code, and is sentenced to an indeterminate penalty of four (4) years
and two (2) months of prision correccional, as minimum, to eight (8) years of prision mayor, as
maximum, and to indemnify private complainant Junior Agustin in the amount of Twenty-Eight
Thousand Pesos (P28,000.00).

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 187052 September 13, 2012

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.
MELISSA CHUA a.k.a. Clarita Ng Chua, Accused-Appellant.

DECISION

VILLARAMA, JR., J.:

Before us is an appeal from the September 15, 2008 Decision1 of the Court of Appeals in CA-G.R. CR-
H.C. No. 01006. The Court of Appeals had affirmed with modification the Decision2 of the Regional Trial
Court (RTC) of Manila, Bnmch 33, in Criminal Case No. 03-217999-403. The RTC found appellant
Melissa Chua, a.k.a. Clarita Ng Chua, guilty beyond reasonable doubt of illegal recruitment in large scale
and four counts of estafa. The Court of Appeals modified the penalty imposed upon appellant for each
count of estafa to an indeterminate penalty of imprisonment for 4 years and 2 months of prision
correccional. as minimum, to 13 years of reclusion temporal, as maximum.

Appellant Melissa Chua was charged on May 6, 2003, with the crime of illegal recruitment in large scale
in an Information3 which alleged:

That on or about and during the period comprised between July 29, 2002 and August 20, 2002, both dates
inclusive, in the City of Manila, Philippines, the said accused, representing herself to have the capacity to
contract, enlist and transport Filipino workers overseas particularly to Taiwan, did then and there wilfully,
unlawfully, for fee, recruit and promise employment/job placement to REY P. TAJADAO, BILLY R.
DANAN,4 ROYLAN A. URSULUM and ALBERTO A. AGLANAO without first having secured the
required license from the Department of Labor and Employment as required by law, and charge or accept
directly or indirectly from said complainants various amounts as placement fees in consideration for their
overseas employment, which amounts are in excess of or greater than that specified in the schedule of
allowable fees prescribed by the POEA, and without valid reasons and without the fault of said
complainants, failed to actually deploy them and failed to reimburse expenses incurred in connection with
their documentation and processing for purposes of their deployment.

Contrary to law.

Appellant was also charged with four counts of estafa in separate Informations, which, save for the date
and the names of private complainants, uniformly read:

That on or about August 10, 2002, in the City of Manila, Philippines, the said accused did then and there
wilfully, unlawfully and feloniously defraud ALBERTO A. AGLANAO in the following manner, to wit:
the said accused, by means of false manifestations and fraudulent representation which she made to said
ALBERTO A. AGLANAO prior to and even simultaneous with the commission of the fraud, to the effect
that she has the power and capacity to recruit and employ the latter in Taiwan as a factory worker and
could facilitate the processing of the pertinent papers if given the necessary amount to meet the
requirements thereof, induced and succeeded in inducing the said ALBERTO A. AGLANAO to give and
deliver, as in fact he gave and delivered to the said accused the amount of P 80,000.00 on the strength of
the said manifestations and representations, said accused well knowing that the same were false and
fraudulent and were made solely to obtain, as in fact she did obtain the amount of P 80,000.00 which
amount, once in her possession, with intent to defraud, they willfully, unlawfully and feloniously
misappropriated, misapplied and converted the same to her own personal use and benefit, to the damage
and prejudice of said ALBERTO A. AGLANAO in the aforesaid amount of P 80,000.00, Philippine
Currency.

Contrary to law.5

On arraignment, appellant pleaded not guilty to all charges. A joint trial of the cases ensued.

At the trial, private complainant Rey P. Tajadao testified that in August 2002, his fellow complainant,
Alberto A. Aglanao, introduced him to appellant Chua. By then, Aglanao had already submitted his
application for employment abroad with appellant. Since Tajadao was also interested to work overseas, he
suggested that Tajadao apply as well.

Soon after, Tajadao met with appellant, who offered him a job as a factory worker in Taiwan for
deployment within the month. Appellant then required him to undergo medical examination and pay a
placement fee of P 80,000. Chua assured Tajadao that whoever pays the application fee the earliest can
leave sooner. Thus, Tajadao delivered to appellant staggered payments of P 40,000, P 35,000 and P 5,000
at the Golden Gate International (Golden Gate) Office in Paragon Tower, Ermita, Manila. Said payments
are evidenced by a voucher6 signed by appellant.

After completing payment, Tajadao was made to sign a contract containing stipulations as to salary and
conditions of work. On several occasions, thereafter, he returned to appellants office to follow-up on his
application. After several visits, however, Tajadao noticed that all the properties of Golden Gate in its
Paragon Tower Office were already gone.

Tajadao filed a complaint for illegal recruitment against appellant before the Philippine Overseas
Employment Agency (POEA). It was only then that he learned that appellant Chua was not licensed to
recruit workers for overseas employment.

Another private complainant, Billy R. Danan, testified that Chua also offered employment abroad but
failed to deploy him. He recalled meeting appellant on August 6, 2002 at the Golden Gate Office in
Ermita, Manila. Danan inquired about the prospect of finding work in Taiwan as a factory worker, and
appellant confirmed there was a standing "job order." The latter advised Danan to obtain a passport,
undergo medical examination, secure an NBI clearance and prepare the amount of P 80,000.

On August 10, 2002, Danan paid appellant in full as evidenced by a cash voucher signed by the latter. A
month passed, however, and he was still unable to leave for Taiwan. Appellant informed Danan that his
departure would be re-scheduled because Taiwan had suspended admission of overseas workers until
after the festival. After appellant advanced this explanation several times, Danan decided to verify
whether she was licensed to recruit.Upon learning otherwise, Danan lodged a complaint for illegal
recruitment against appellant with the POEA.

The third private complainant, Alberto Aglanao, testified that he met appellant Chua on August 5, 2002.
Like Tajadao and Danan, Aglanao applied for work as a factory worker in Taiwan. Appellant similarly
assured Aglanao of employment abroad upon payment of P 80,000. But despite payment7 of said amount
on August 10, 2002, appellant failed to deploy Aglanao to Taiwan.

Roylan Ursulum,8 the fourth private complainant, testified that he too went to the Golden Gate Office in
Ermita, Manila to seek employment as a factory worker. He was introduced by Shirley Montano to
appellant Chua. The latter told Ursulum that the first applicants to pay the placement fee of P 80,000 shall
be deployed ahead of the others. Thus, Ursulum obtained a loan of P 80,000 to cover the placement fee,
which he allegedly gave appellant in two installments of P 40,000 each. As with the rest of the private
complainants, Ursulum never made it to Taiwan. Ursulum did not submit proof of payment but presented,
instead, ten text messages on his mobile phone supposedly sent by appellant. One of said text messages
reads, "Siguro anong laking saya nyo pag namatay na ko."

The prosecution likewise presented as witness Severino Maranan, Senior Labor Employment Officer of
the POEA. Maranan confirmed that appellant Chua was neither licensed nor authorized to recruit workers
for overseas employment. In support, he presented to the court a certification issued by the POEA to that
effect.

In her defense, appellant Chua denies having recruited private complainants for overseas employment.
According to appellant, she was only a cashier at Golden Gate, which is owned by Marilen Callueng.
However, she allegedly lost to a robbery her identification card evidencing her employment with the
agency. Appellant denied any knowledge of whether the agency was licensed to recruit workers during
her tenure as it has been delisted.

In a Decision dated March 28, 2005, the RTC of Manila, Branch 33, found appellant Melissa Chua, a.k.a.
Clarita Ng Chua, guilty beyond reasonable doubt of illegal recruitment in large scale and four counts of
estafa. The fallo of the RTC decision reads:

WHEREFORE, the prosecution having established the guilt of the accused beyond reasonable doubt,
judgment is hereby rendered CONVICTING the accused as principal in the crime of illegal recruitment in
large scale and estafa (four counts) and she is sentenced to suffer the penalty of LIFE IMPRISONMENT
and a fine of Five Hundred Thousand Pesos (Php500,000.00) for illegal recruitment in large scale; and the
indeterminate penalty of four (4) years and two (2) months of prision correccional, as minimum, to
Twelve (12) years of prision mayor as maximum for EACH count of Estafa.

The accused is also ordered to pay each of the complainant[s] the amount of P 80,000.00.

In the service of the sentence, the accused is credited with a x x x the full extent of her preventive
imprisonment if she agrees in writing to observe the same disciplinary rules imposed upon convicted
prisoners; otherwise, only 4/5 of the time of such preventive imprisonment shall be credited to her.

SO ORDERED.9

The trial court relied on the testimony of Severino Maranan, Senior Labor Employment Officer of the
POEA, that appellant is not licensed to recruit workers for overseas employment at the time she promised
but failed to place the four private complainants for work abroad. It accorded greater weight to the
testimonies of private complainants who positively identified appellant as the person who recruited them
for employment in Taiwan and received the placement fees.

The court a quo likewise found appellant guilty beyond reasonable doubt of estafa for misrepresenting
herself as having the power and capacity to recruit and place private complainants as factory workers in
Taiwan. Such misrepresentation, the trial court stressed, induced private complainants to part with their
money. The RTC brushed aside appellants defense that she was merely a cashier of Golden Gate and that
the same is owned by Marilen Callueng. It gave little weight to the receipts submitted by appellant to
prove that she turned over the placement fees to Callueng. The trial court observed nothing in said
receipts indicating that the money came from private complainants.

Dissatisfied, appellant Chua filed a Notice of Appeal10 on April 15, 2005.

By Decision dated September 15, 2008, the Court of Appeals affirmed with modification the RTC ruling.
It modified the penalty for each of the four counts of estafa by imposing upon appellant an indeterminate
sentence of 4 years and 2 months of prision correccional, as minimum, to 13 years of reclusion temporal,
as maximum, for each count of estafa.

The appellate court held that the prosecution has established by proof beyond reasonable doubt that
appellant had no license to recruit at the time she promised employment to and received placement fees
from private complainants. It dismissed appellants defense that she was only a cashier of Golden Gate
and that she remitted the placement fees to "the agencys treasurer." The Court of Appeals explained that
in order to hold a person liable for illegal recruitment, it is enough that he or she promised or offered
employment for a fee, as appellant did.

The appellate court held further that the same pieces of evidence which establish appellants commission
of illegal recruitment also affirm her liability for estafa. It pointed out that appellant defrauded private
complainants when she misrepresented that they would be hired abroad upon payment of the placement
fee. The Court of Appeals perceived no ill motive on the part of private complainants to testify falsely
against appellant.

Lastly, the appellate court modified the penalty imposed by the trial court upon appellant Chua for each
count of estafa. It raised the maximum period of appellants indeterminate sentence from 12 years of
prision mayor to 13 years of reclusion temporal.

On October 6, 2008, appellant Chua elevated the case to this Court byfiling a Notice of Appeal.11

In a Resolution12 dated July 1, 2009, we required the parties to file their respective supplemental briefs, if
they so desire. On August 26, 2009, appellant Chua filed a Manifestation (In lieu of Supplemental
Brief)13 by which she repleaded and adopted all the defenses and arguments raised in her Appellants
Brief.14 On September 3, 2009, the Office of the Solicitor

General, for the People, filed a Manifestation15 that it will no longer file a supplemental brief since it has
discussed in its Appellees Brief16 all the matters and issues raised in the Appellants Brief.

Before us, appellant Melissa Chua presents a lone assignment of error:

THE TRIAL COURT GRAVELY ERRED IN FINDING THE ACCUSED-APPELLANT GUILTY OF

THE OFFENSE OF ILLEGAL RECRUITMENT IN LARGE SCALE AND FOUR (4) COUNTS OF
ESTAFA DESPITE THE INSUFFICIENCY OF THE EVIDENCE FOR THE PROSECUTION. 17

The Office of the Solicitor General, for the people, submits that it has established all the elements
necessary to hold appellant Chua liable for illegal recruitment in large scale and estafa. It cites the
testimony of Severino Maranan, Senior Labor Employment Officer of the POEA, and the certification
issued by Felicitas Q. Bay, Director II of the POEA, to the effect that appellant was not authorized to
engage in recruitment activities.The OSG argues against appellants defense that she was only a cashier of
Golden Gate on the argument that her act of representing to the four private complainants that she could
send them to Taiwan as factory workers constitutes recruitment. It stresses that the crime of illegal
recruitment in large scale is malum prohibitum; hence, mere commission of the prohibited act is
punishable and criminal intent is immaterial. Lastly, the OSG points out that appellant failed to show any
ill motive on the part of private complainants to testify falsely against her.

For her part, appellant Chua maintains that she was merely a cashier of Golden Gate International. She
disowns liability for allegedly "merely acting under the direction of her superiors"18 and for being
"unaware that her acts constituted a crime."19 Appellant begs the Court to review the factual findings of
the court a quo.

The crime of illegal recruitment is defined and penalized under Sections 6 and 7 of Republic Act (R.A.)
No. 8042, or the Migrant Workers and Overseas Filipinos Act of 1995, as follows:

SEC. 6. Definition. For purposes of this Act, illegal recruitment shall mean any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract
services, promising or advertising for employment abroad, whether for profit or not, when undertaken by
a non-licensee or non-holder of authority contemplated under Article 13 (f) of Presidential Decree No.
442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That any such non-
licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or
more persons shall be deemed so engaged. It shall likewise include the following acts, x x x:

xxxx

Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more
persons conspiring or confederating with one another. It is deemed committed in large scale if committed
against three (3) or more persons individually or as a group.

The persons criminally liable for the above offenses are the principals, accomplices and accessories. In
case of juridical persons, the officers having control, management or direction of their business shall be
liable.

SEC. 7. Penalties.

(a) Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of not less than
six (6) years and one (1) day but not more than twelve (12) years and a fine of not less than Two hundred
thousand pesos (P 200,000.00) nor more than Five hundred thousand pesos (P 500,000.00).

(b) The penalty of life imprisonment and a fine of not less than Five hundred thousand pesos
(P 500,000.00) nor more than One million pesos (P 1,000,000.00) shall be imposed if illegal recruitment
constitutes economic sabotage as defined herein.

Provided, however, That the maximum penalty shall be imposed if the person illegally recruited is less
than eighteen (18) years of age or committed by a non-licensee or non-holder of authority.

In order to hold a person liable for illegal recruitment, the following elements must concur: (1) the
offender undertakes any of the activities within the meaning of "recruitment and placement" under Article
13(b)20 of the Labor Code, or any of the prohibited practices enumerated under Article
3421 of the Labor Code (now Section 6 of Republic Act No. 8042) and (2) the offender has no valid
license or authority required by law to enable him to lawfully engage in recruitment and placement of
workers.22 In the case of illegal recruitment in large scale, a third element is added: that the offender
commits any of the acts of recruitment and placement against three or more persons, individually or as a
group.23 All three elements are present in the case at bar.

Inarguably, appellant Chua engaged in recruitment when she represented to private complainants that she
could send them to Taiwan as factory workers upon submission of the required documents and payment
of the placement fee. The four private complainants positively identified appellant as the person who
promised them employment as factory workers in Taiwan for a fee of P 80,000. More importantly,
Severino Maranan the Senior Labor Employment Officer of the POEA, presented a Certification dated
December 5, 2002, issued by Director Felicitas Q. Bay, to the effect that appellant Chua is not licensed by
the POEA to recruit workers for overseas employment.

The Court finds no reason to deviate from the findings and conclusions of the trial court and appellate
court. The prosecution witnesses were positive and categorical in their testimonies that they personally
met appellant and that the latter promised to send them abroad for employment.

In fact, the substance of their testimonies corroborate each other on material points, such as the amount of
the placement fee, the country of destination and the nature of work. Without any evidence to show that
private complainants were propelled by any ill motive to testify falsely against appellant, we shall accord
their testimonies full faith and credit. After all, the doctrinal rule is that findings of fact made by the trial
court, which had the opportunity to directly observe the witnesses and to determine the probative value of
the other testimonies, are entitled to great weight and respect because the trial court is in a better position
to assess the same, an opportunity not equally open to the appellate court.24 The absence of any showing
that the trial court plainly overlooked certain facts of substance and value that, if considered, might affect
the result of the case, or that its assessment was arbitrary, impels the Court to defer to the trial courts
determination according credibility to the prosecution evidence.25

Appellant cannot escape liability by conveniently limiting her participation as a cashier of Golden Gate.
The provisions of Article 13(b) of the Labor Code and Section 6 of R.A. No. 8042 are unequivocal that
illegal recruitment may or may not be for profit. It is immaterial, therefore, whether appellant remitted the
placement fees to "the agencys treasurer" or appropriated them. The same provision likewise provides
that the persons criminally liable for illegal recruitment are the principals, accomplices and accessories.
Just the same, therefore, appellant can be held liable as a principal by direct participation since she
personally undertook the recruitment of private complainants without a license or authority to do so.
Worth stressing, the Migrant Workers and Overseas Filipinos Act of 1995 is a special law, a violation of
which is malum prohibitum, not mala in se. Intent is thus, immaterial26and mere commission of the
prohibited act is punishable.

Furthermore, we agree with the appellate court that the same pieces of evidence which establish
appellants liability for illegal recruitment in large scale likewise confirm her culpability for estafa.

It is well-established in jurisprudence that a person may be charged and convicted for both illegal
recruitment and estafa. The reason therefor is not hard to discern: illegal recruitment is malum
prohibitum, while estafa is mala in se. In the first, the criminal intent of the accused is not necessary for
conviction. In the second, such intent is imperative. Estafa under Article 315, paragraph 2(a) of the
Revised Penal Code is committed by any person who defrauds another by using fictitious name, or falsely
pretends to possess power, influence, qualifications, property, credit, agency, business or imaginary
transactions, or by means of similar deceits executed prior to or simultaneously with the commission of
fraud.27

The elements of estafa by means of deceit are the following: (a) that there must be a false pretense or
fraudulent representation as to his power, influence, qualifications, property, credit, agency, business or
imaginary transactions; (b) that such false pretense or fraudulent representation was made or executed
prior to or simultaneously with the commission of the fraud; (c) that the offended party relied on the false
pretense, fraudulent act, or fraudulent means and was induced to part with his money or property; and (d)
that, as a result thereof, the offended party suffered damage.28

In this case, the prosecution has established that appellant defrauded the complaining witnesses by
leading them to believe that she has the capacity to send them to Taiwan for work, even as she does not
have a license or authority for the purpose. Such misrepresentation came before private complainants
delivered P 80,000 as placement fee to appellant. Clearly, private complainants would not have parted
with their money were it not for such enticement by appellant. As a consequence of appellants false
pretenses, the private complainants suffered damages as the promised employment abroad never
materialized and the money they paid were never recovered.29

In an effort to exculpate herself, appellant presented in evidence 11 vouchers30 amounting to P 314,030,

which was allegedly received by Marilen Callueng, the supposed owner of Golden Gate. Notably, the
dates on which said vouchers were issued and the amounts purportedly remitted to Callueng by way
thereof do not correspond with the placement fee given by private complainants and the dates on which
they paid the same to appellant. For instance, private complainants Aglanao and Danan
delivered P 80,000 to appellant on August 10, 2002 but none of the vouchers presented by appellant was
issued on said date. On August 20, 2002, private complainant Tajadao paid P 40,000 to appellant but the
latters voucher for said date covers only P 22,480. More importantly, there is nothing in appellants
vouchers to indicate that the amounts listed therein were received from private complainants. On the other
hand, while the vouchers presented by private complainants Aglanao, Danan and Tajadao do not bear
their names, they could not have come into possession of said form except through appellant. Hence,
appellant admitted in open court that she received P 80,000 from private complainants and that she was
authorized to issue receipts, thus:

ATTY: BETIC:

Q: Were you authorized to issue receipts in behalf of that Agency?

A: yes, Sir.

xxxx

Q: Now, you said that you were employed with Golden Gate Agency owned and operated by Marilen
Callueng, and as a cashier did you happen to come across private complainants, Billy R. Da[n]an, Alberto
Aglanao and Rey Tajadao?

A: Yes, Sir before they were asked to sign a contract they paid to me.

Q: Do you know how much were paid or given by the persons I have mentioned?

A: Eighty Thousand Pesos Only (P 80,000.00) Sir.

Q: Each?

A: Yes, Sir.31

Be that as it may, we take exception as regards private complainant Roylan Ursulum. The Court finds that
the prosecution failed to establish the presence of the third and fourth elements of estafa as regards the
incident with Roylan Ursulum. While Ursulum claims that he delivered to Chua two installments
of P 40,000 each on July 29, 2002 and August 3, 2002, he failed to produce receipts to substantiate the
same. Instead, Ursulum relies on ten text messages allegedly sent by appellant as evidence of their
transaction. Out of said series of messages, Ursulum presented only one which reads, "Siguro anong
laking saya nyo pag namatay na ko." Notably, the prosecution did not present evidence to confirm
whether said text message actually emanated from appellant. Assuming arguendo that it did, still, said
message alone does not constitute proof beyond reasonable doubt that appellant was able to
obtain P 80,000 from Ursulum as a result of her false pretenses.

Unlike in illegal recruitment where profit is immaterial, a conviction for estafa requires a clear showing
that the offended party parted with his money or property upon the offenders false pretenses, and
suffered damage thereby. In every criminal prosecution, the State must prove beyond reasonable doubt all
the elements of the crime charged and the complicity or participation of the accused.32 It is imperative,
therefore, that damage as an element of estafa under Article 315, paragraph 2(a) be proved as
conclusively as the offense itself. The failure of the prosecution to discharge this burden concerning the
estafa allegedly committed against Ursulum warrants the acquittal of appellant on the said charge.

Now on the matter of the appropriate penalty. Under Section 6, R.A. No. 8042, illegal recruitment when
committed in large scale shall be considered as an offense involving economic sabotage. Accordingly, it
shall be punishable by life imprisonment and a fine of not less than P 500,000 nor more than P 1,000,000.
The law provides further that the maximum penalty shall be imposed if illegal recruitment is committed
by a non-licensee or non-holder of authority.

In the case at bar, the trial court imposed upon appellant Chua the penalty of life imprisonment and a fine
of P 500,000. However, considering that appellant is a non-licensee or non-holder of authority, we deem
it proper to impose upon her the maximum penalty of life imprisonment and fine of P 1,000,000.

Meanwhile, the penalty for estafa under Article 315 of the Revised Penal Code is prision correccional in
its maximum period to prision mayor in its minimum period, if the amount of the fraud is over P 12,000
but does not exceed P 22,000. If the amount exceeds P 22,000, the penalty shall be imposed in its
maximum period, adding one year for each additional P 10,000. But, the total penalty imposed shall not
exceed 20 years.

The range of penalty provided for in Article 315 is composed of only two periods.1wphi1 Thus, to get
the maximum period of the indeterminate sentence, the total number of years included in the two periods
should be divided into three equal periods of time, forming one period for each of the three portions. The
maximum, medium and minimum periods of the prescribed penalty are therefore:

Minimum period - 4 years, 2 months and 1 day to 5 years, 5 months and 10 days

Medium period - 5 years, 5 months and 11 days to 6 years, 8 months and 20 days

Maximum period - 6 years, 8 months and 21 days to 8 years.33

In this case, the amount by which appellant defrauded private complainants Aglanao, Danan and Tajadao
is P 80,000, which exceeds P 22,000. Hence, the penalty should be imposed in the maximum period of 6
years, 8 months and 21 days to 8 years. Since the total amount of fraud in this case exceeds the threshold
amount of P 22,000 by P 58,000, an additional penalty of five years imprisonment should be imposed.
Thus, the maximum period of appellant's indeterminate sentence should be 13 years of reclusion
temporal.

The minimum period of the indeterminate sentence, on the other hand, should be within the nmge
ofpenaity next lower to that prescribed by Article 315, paragraph 2(a) of the Revised Penal Code for the
crime committed.The penalty next lower to prision correccional maximum to prision mayor minimum is
prision correccional minimum (6 months and 1 day to 2 years and 4 months) to prision correccional
medium (2 years, 4 months and 1 day to 4 years and 2 months). Thus, the appellate court correctly
modified the minirnum period of appellant's sentence to 4 years and 2 months of prision correccional.

WHEREFORE, the appeal is PARTLY GRANTED. Appellant Melissa Chua, a.k.a. Clarita Ng Chua is
ACQUITTED of one count of estafa filed by private complainant Roylan Ursulum in Criminal Case No.
03-21 7999-403.

The Decision dated September I5, 2008 of the Court of Appeals in CA-G.R. CR-H.C. No. 01006 is
AFFIRMED with MODIFICATION in that the appellant is ordered to pay a fine of P 1,000,000 and to
indemnify each of the private complainants Alberto A. Aglanao, Billy R. Danan and Rey P. Tajadao in
the amount of P-80,000.

With costs against the accused-appellant.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 100641 June 14, 1993

FARLE P. ALMODIEL, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), RAYTHEON PHILS.,
INC., respondents.

Apolinario Lomabao, Jr. for petitioner.

Vicente A. Cruz, Jr., for private respondent.

NOCON, J.:

Subject of this petition for certiorari is the decision dated March 21, 1991 of the National Labor
Relations Commission in NLRC Case No.
00-00645-89 which reversed and set aside the Labor Arbiter's decision dated September 27, 1989 and
ordered instead the payment of separation pay and financial assistance of P100,000.00. Petitioner imputes
grave abuse of discretion on the part of the Commission and prays for the reinstatement of the Labor
Arbiter's decision which declared his termination on the ground of redundancy illegal.

Petitioner Farle P. Almodiel is a certified public accountant who was hired in October, 1987 as Cost
Accounting Manager of respondent Raytheon Philippines, Inc. through a reputable placement firm, John
Clements Consultants, Inc. with a starting monthly salary of P18,000.00. Before said employment, he was
the accounts executive of Integrated Microelectronics, Inc. for several years. He left his lucrative job
therein in view of the promising career offered by Raytheon. He started as a probationary or temporary
employee. As Cost Accounting Manager, his major duties were: (1) plan, coordinate and carry out year
and physical inventory; (2) formulate and issue out hard copies of Standard Product costing and other
cost/pricing analysis if needed and required and (3) set up the written Cost Accounting System for the
whole company. After a few months, he was given a regularization increase of P1,600.00 a month. Not
long thereafter, his salary was increased to P21,600.00 a month.

On August 17, 1988, he recommended and submitted a Cost Accounting/Finance Reorganization,

affecting the whole finance group but the same was disapproved by the Controller. However, he was
assured by the Controller that should his position or department which was apparently a one-man
department with no staff becomes untenable or unable to deliver the needed service due to manpower
constraint, he would be given a three (3) year advance notice.

In the meantime, the standard cost accounting system was installed and used at the Raytheon plants and
subsidiaries worldwide. It was likewise adopted and installed in the Philippine operations. As a
consequence, the services of a Cost Accounting Manager allegedly entailed only the submission of
periodic reports that would use computerized forms prescribed and designed by the international head
office of the Raytheon Company in California, USA.

On January 27, 1989, petitioner was summoned by his immediate boss and in the presence of IRD
Manager, Mr. Rolando Estrada, he was told of the abolition of his position on the ground of redundancy.
He pleaded with management to defer its action or transfer him to another department, but he was told
that the decision of management was final and that the same has been conveyed to the Department of
Labor and Employment. Thus, he was constrained to file the complaint for illegal dismissal before the
Arbitration Branch of the National Capital Region, NLRC, Department of Labor and Employment.

On September 27, 1989, Labor Arbiter Daisy Cauton-Barcelona rendered a decision, the dispositive
portion of which reads as follows:

WHEREFORE, judgment is hereby rendered declaring that complainant's termination on

the ground of redundancy is highly irregular and without legal and factual basis, thus
ordering the respondents to reinstate complainant to his former position with full
backwages without lost of seniority rights and other benefits. Respondents are further
ordered to pay complainant P200,000.00 as moral damages and P20,000.00 as exemplary
damages, plus ten percent (10%) of the total award as attorney's fees.1

Raytheon appealed therefrom on the grounds that the Labor Arbiter committed grave abuse of discretion
in denying its rights to dismiss petitioner on the ground of redundancy, in relying on baseless surmises
and self-serving assertions of the petitioner that its act was tainted with malice and bad faith and in
awarding moral and exemplary damages and attorney's fees.

On March 21, 1991, the NLRC reversed the decision and directed Raytheon to pay petitioner the total
sum of P100,000.00 as separation pay/financial assistance. The dispositive portion of which is hereby
quoted as follows:

WHEREFORE, the appealed decision is hereby set aside. In its stead, Order is hereby
issued directing respondent to pay complainant the total separation pay/financial
assistance of One Hundred Thousand Pesos (P100,000.00).

SO ORDERED. 2

From this decision, petitioner filed the instant petition averring that:

The public respondent committed grave abuse of discretion amounting to (lack of) or in
excess of jurisdiction in declaring as valid and justified the termination of petitioner on
the ground of redundancy in the face of clearly established finding that petitioner's
termination was tainted with malice, bad faith and irregularity. 3

Termination of an employee's services because of redundancy is governed by Article 283 of the Labor
Code which provides as follows:

Art. 283. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
 provisions of this Title, by serving a written notice on the worker and the Department of
Labor and Employment at least one (1) month before the intended date thereof. In case of
termination due to installation of labor-saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least one (1) month pay for
every year of service, whichever is higher. In case of retrenchment to prevent losses and
in cases of closure or cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay shall be equivalent to at
least one (1) month pay or at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered as one (1)
whole year.

There is no dispute that petitioner was duly advised, one (1) month before, of the termination of his
employment on the ground of redundancy in a written notice by his immediate superior, Mrs. Magdalena
B.D. Lopez sometime in the afternoon of January 27, 1989. He was issued a check for P54,863.00
representing separation pay but in view of his refusal to acknowledge the notice and the check, they were
sent to him thru registered mail on January 30, 1989. The Department of Labor and Employment was
served a copy of the notice of termination of petitioner in accordance with the pertinent provisions of the
Labor Code and the implementing rules.

The crux of the controversy lies on whether bad faith, malice and irregularity crept in the abolition of
petitioner's position of Cost Accounting Manager on the ground of redundancy. Petitioner claims that the
functions of his position were absorbed by the Payroll/Mis/Finance Department under the management of
Danny Ang Tan Chai, a resident alien without any working permit from the Department of Labor and
Employment as required by law. Petitioner relies on the testimony of Raytheon's witness to the effect that
corollary functions appertaining to cost accounting were dispersed to other units in the Finance
Department. And granting that his department has to be declared redundant, he claims that he should have
been the Manager of the Payroll/Mis/Finance Department which handled general accounting, payroll and
encoding. As a B. S. Accounting graduate, a CPA with M.B.A. units, 21 years of work experience, and a
natural born Filipino, he claims that he is better qualified than Ang Tan Chai, a B.S. Industrial Engineer,
hired merely as a Systems Analyst Programmer or its equivalent in early 1987, promoted as MIS Manager
only during the middle part of 1988 and a resident alien.

On the other hand, Raytheon insists that petitioner's functions as Cost Accounting Manager had not been
absorbed by Ang Tan Chai, a permanent resident born in this country. It claims to have established below
that Ang Tan Chai did not displace petitioner or absorb his functions and duties as they were occupying
entirely different and distinct positions requiring different sets of expertise or qualifications and
discharging functions altogether different and foreign from that of petitioner's abolished position.
Raytheon debunks petitioner's reliance on the testimony of Mr. Estrada saying that the same witness
testified under oath that the functions of the Cost Accounting Manager had been completely dispensed
with and the position itself had been totally abolished.

Whether petitioner's functions as Cost Accounting Manager have been dispensed with or merely absorbed
by another is however immaterial. Thus, notwithstanding the dearth of evidence on the said question, a
resolution of this case can be arrived at without delving into this matter. For even conceding that the
functions of petitioner's position were merely transferred, no malice or bad faith can be imputed from said
act. A survey of existing case law will disclose that in Wiltshire File Co., Inc. v. NLRC, 4 the position of
Sales Manager was abolished on the ground of redundancy as the duties previously discharged by the
Sales Manager simply added to the duties of the General Manager to whom the Sales Manager used to
report. In adjudging said termination as legal, this Court said that redundancy, for purposes of our Labor
Code, exists where the services of an employee are in excess of what is reasonably demanded by the
actual requirements of the enterprise. The characterization of an employee's services as no longer
necessary or sustainable, and therefore, properly terminable, was an exercise of business judgment on the
part of the employer. The wisdom or soundness of such characterization or decision was not subject to
discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of
law or merely arbitrary and malicious action is not shown.

In the case of International Macleod, Inc. v. Intermediate Appellate Court, 5 this Court also considered the
position of Government Relations Officer to have become redundant in view of the appointment of the
International Heavy Equipment Corporation as the company's dealer with the government. It held therein
that the determination of the need for the phasing out of a department as a labor and cost saving device
because it was no longer economical to retain said services is a management prerogative and the courts
will not interfere with the exercise thereof as long as no abuse of discretion or merely arbitrary or
malicious action on the part of management is shown.

In the same vein, this Court ruled in Bondoc v. People's Bank and Trust Co., 6 that the bank's board of
directors possessed the power to remove a department manager whose position depended on the retention
of the trust and confidence of management and whether there was need for his services. Although some
vindictive motivation might have impelled the abolition of his position, this Court expounded that it is
undeniable that the bank's board of directors possessed the power to remove him and to determine
whether the interest of the bank justified the existence of his department.

Indeed, an employer has no legal obligation to keep more employees than are necessary for the operation
of its business. Petitioner does not dispute the fact that a cost accounting system was installed and used at
Raytheon subsidiaries and plants worldwide; and that the functions of his position involve the submission
of periodic reports utilizing computerized forms designed and prescribed by the head office with the
installation of said accounting system. Petitioner attempts to controvert these realities by alleging that
some of the functions of his position were still indispensable and were actually dispersed to another
department. What these indispensable functions that were dispersed, he failed however, to specify and
point out. Besides, the fact that the functions of a position were simply added to the duties of another does
not affect the legitimacy of the employer's right to abolish a position when done in the normal exercise of
its prerogative to adopt sound business practices in the management of its affairs.

Considering further that petitioner herein held a position which was definitely managerial in character,
Raytheon had a broad latitude of discretion in abolishing his position. An employer has a much wider
discretion in terminating employment relationship of managerial personnel compared to rank and file
employees. 7 The reason obviously is that officers in such key positions perform not only functions which
by nature require the employer's full trust and confidence but also functions that spell the success or
failure of an enterprise.

Likewise destitute of merit is petitioner's imputation of unlawful discrimination when Raytheon caused
corollary functions appertaining to cost accounting to be absorbed by Danny Ang Tan Chai, a resident
alien without a working permit. Article 40 of the Labor Code which requires employment permit refers to
non-resident aliens. The employment permit is required for entry into the country for employment
purposes and is issued after determination of the non-availability of a person in the Philippines who is
competent, able and willing at the time of application to perform the services for which the alien is
desired. Since Ang Tan Chai is a resident alien, he does not fall within the ambit of the provision.

Petitioner also assails Raytheon's choice of Ang Tan Chai to head the Payroll/Mis/Finance Department,
claiming that he is better qualified for the position. It should be noted, however, that Ang Tan Chai was
promoted to the position during the middle part of 1988 or before the abolition of petitioner's position in
early 1989. Besides the fact that Ang Tan Chai's promotion thereto is a settled matter, it has been
consistently held that an objection founded on the ground that one has better credentials over the
appointee is frowned upon so long as the latter possesses the minimum qualifications for the position. In
the case at bar, since petitioner does not allege that Ang Tan Chai does not qualify for the position, the
Court cannot substitute its discretion and judgment for that which is clearly and exclusively management
prerogative. To do so would take away from the employer what rightly belongs to him as aptly explained
in National Federation of Labor Unions v. NLRC: 8

It is a well-settled rule that labor laws do not authorize interference with the employer's
judgment in the conduct of his business. The determination of the qualification and
fitness of workers for hiring and firing, promotion or reassignment are exclusive
prerogatives of management. The Labor Code and its implementing Rules do not vest in
the Labor Arbiters nor in the different Divisions of the NLRC (nor in the courts)
managerial authority. The employer is free to determine, using his own discretion and
business judgment, all elements of employment, "from hiring to firing" except in cases of
unlawful discrimination or those which may be provided by law. There is none in the
instant case.

Finding no grave abuse of discretion on the part of the National Labor Relations Commission in reversing
and annulling the decision of the Labor Arbiter and that on the contrary, the termination of petitioner's
employment was anchored on a valid and authorized cause under Article 283 of the Labor Code, the
instant petition for certiorari must fail.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 93666 April 22, 1991

GENERAL MILLING CORPORATION and EARL TIMOTHY CONE, petitioners,

vs.
HON. RUBEN D. TORRES, in his capacity as Secretary of Labor and Employment, HON.
BIENVENIDO E. LAGUESMA, in his capacity as Acting Secretary of Labor and Employment,
and BASKETBALL COACHES ASSOCIATION OF THE PHILIPPINES, respondents.

Sobrevinas, Diaz, Hayudini & Bodegon Law Office for petitioners.

Rodrigo, Cuevas & De Borja for respondent BCAP.

RESOLUTION

FELICIANO, J.:

On 1 May 1989, the National Capital Region of the Department of Labor and Employment issued Alien
Employment Permit No. M-0689-3-535 in favor of petitioner Earl Timothy Cone, a United States citizen,
as sports consultant and assistant coach for petitioner General Milling Corporation ("GMC").

On 27 December 1989, petitioners GMC and Cone entered into a contract of employment whereby the
latter undertook to coach GMC's basketball team.

On 15 January 1990, the Board of Special Inquiry of the Commission on Immigration and Deportation
approved petitioner Cone's application for a change of admission status from temporary visitor to pre-
arranged employee.

On 9 February 1990, petitioner GMC requested renewal of petitioner Cone's alien employment permit.
GMC also requested that it be allowed to employ Cone as full-fledged coach. The DOLE Regional
Director, Luna Piezas, granted the request on 15 February 1990.

On 18 February 1990, Alien Employment Permit No. M-02903-881, valid until 25 December 1990, was
issued.

Private respondent Basketball Coaches Association of the Philippines ("BCAP") appealed the issuance of
said alien employment permit to the respondent Secretary of Labor who, on 23 April 1990, issued a
decision ordering cancellation of petitioner Cone's employment permit on the ground that there was no
showing that there is no person in the Philippines who is competent, able and willing to perform the
services required nor that the hiring of petitioner Cone would redound to the national interest.
Petitioner GMC filed a Motion for Reconsideration and two (2) Supplemental Motions for
Reconsideration but said Motions were denied by Acting Secretary of Labor Bienvenido E. Laguesma in
an Order dated 8 June 1990.

Petitioners are now before the Court on a Petition for Certiorari, dated 14 June 1990, alleging that:

1. respondent Secretary of Labor gravely abused his discretion when he revoked petitioner Cone's
alien employment permit; and

2. Section 6 (c), Rule XIV, Book I of the Omnibus Rules Implementing the Labor Code is null
and void as it is in violation of the enabling law as the Labor Code does not empower respondent
Secretary to determine if the employment of an alien would redound to national interest.

Deliberating on the present Petition for Certiorari, the Court considers that petitioners have failed to
show any grave abuse of discretion or any act without or in excess of jurisdiction on the part of
respondent Secretary of Labor in rendering his decision, dated 23 April 1990, revoking petitioner Cone's
Alien Employment Permit.

The alleged failure to notify petitioners of the appeal filed by private respondent BCAP was cured when
petitioners were allowed to file their Motion for Reconsideration before respondent Secretary of Labor.1

Petitioner GMC's claim that hiring of a foreign coach is an employer's prerogative has no legal basis at
all. Under Article 40 of the Labor Code, an employer seeking employment of an alien must first obtain an
employment permit from the Department of Labor. Petitioner GMC's right to choose whom to employ is,
of course, limited by the statutory requirement of an alien employment permit.

Petitioners will not find solace in the equal protection clause of the Constitution. As pointed out by the
Solicitor-General, no comparison can be made between petitioner Cone and Mr. Norman Black as the
latter is "a long time resident of the country," and thus, not subject to the provisions of Article 40 of the
Labor Code which apply only to "non-resident aliens." In any case, the term "non-resident alien" and its
obverse "resident alien," here must be given their technical connotation under our law on immigration.

Neither can petitioners validly claim that implementation of respondent Secretary's decision would
amount to an impairment of the obligations of contracts. The provisions of the Labor Code and its
Implementing Rules and Regulations requiring alien employment permits were in existence long before
petitioners entered into their contract of employment. It is firmly settled that provisions of applicable
laws, especially provisions relating to matters affected with public policy, are deemed written into
contracts.2 Private parties cannot constitutionally contract away the otherwise applicable provisions of
law.

Petitioners' contention that respondent Secretary of Labor should have deferred to the findings of
Commission on Immigration and Deportation as to the necessity of employing petitioner Cone, is, again,
bereft of legal basis. The Labor Code itself specifically empowers respondent Secretary to make a
determination as to the availability of the services of a "person in the Philippines who is competent, able
and willing at the time of application to perform the services for which an alien is desired."3

In short, the Department of Labor is the agency vested with jurisdiction to determine the question of
availability of local workers. The constitutional validity of legal provisions granting such jurisdiction and
authority and requiring proof of non-availability of local nationals able to carry out the duties of the
position involved, cannot be seriously questioned.
Petitioners apparently also question the validity of the Implementing Rules and Regulations, specifically
Section 6 (c), Rule XIV, Book I of the Implementing Rules, as imposing a condition not found in the
Labor Code itself. Section 6 (c), Rule XIV, Book I of the Implementing Rules, provides as follows:

Section 6. Issuance of Employment Permit the Secretary of Labor may issue an employment
permit to the applicant based on:

a) Compliance by the applicant and his employer with the requirements of Section 2 hereof;

b) Report of the Bureau Director as to the availability or non-availability of any person in the
Philippines who is competent and willing to do the job for which the services of the applicant are
desired.

(c) His assessment as to whether or not the employment of the applicant will redound to the
national interest;

(d) Admissibility of the alien as certified by the Commission on Immigration and Deportation;

(e) The recommendation of the Board of Investments or other appropriate government agencies if
the applicant will be employed in preferred areas of investments or in accordance with the
imperative of economic development;

xxx xxx xxx

(Emphasis supplied)

Article 40 of the Labor Code reads as follows:

Art. 40. Employment per unit of non-resident aliens. Any alien seeking admission to the
Philippines for employment purposes and any domestic or foreign employer who desires to
engage an alien for employment in the Philippines shall obtain an employment permit from the
Department of Labor.

The employment permit may be issued to a non-resident alien or to the applicant employer after a
determination of the non-availability of a person in the Philippines who is competent, able and
willing at the time of application to perform the services for which the alien is desired.

For an enterprise registered in preferred areas of investments, said employment permit may be
issued upon recommendation of the government agency charged with the supervision of said
registered enterprise. (Emphasis supplied)

Petitioners apparently suggest that the Secretary of Labor is not authorized to take into account the
question of whether or not employment of an alien applicant would "redound to the national interest"
because Article 40 does not explicitly refer to such assessment. This argument (which seems impliedly to
concede that the relationship of basketball coaching and the national interest is tenuous and unreal) is not
persuasive. In the first place, the second paragraph of Article 40 says: "[t]he employment permit may be
issued to a non-resident alien or to the applicant employer after a determination of the non-availability of
a person in the Philippines who is competent, able and willing at the time of application to perform the
services for which the alien is desired." The permissive language employed in the Labor Code indicates
that the authority granted involves the exercise of discretion on the part of the issuing authority. In the
second place, Article 12 of the Labor Code sets forth a statement of objectives that the Secretary of Labor
should, and indeed must, take into account in exercising his authority and jurisdiction granted by the
Labor Code,

Art. 12. Statement of Objectives. It is the policy of the State:

a) To promote and maintain a state of full employment through improved manpower training,
allocation and utilization;

xxx xxx xxx

c) To facilitate a free choice of available employment by persons seeking work in conformity

with the national interest;

d) To facilitate and regulate the movement of workers in conformity with the national interest;

e) To regulate the employment of aliens, including the establishment of a registration and/or work
permit system;

xxx xxx xxx

Thus, we find petitioners' arguments on the above points of constitutional law too insubstantial to require
further consideration.1avvphi1

Petitioners have very recently manifested to this Court that public respondent Secretary of Labor has
reversed his earlier decision and has issued an Employment Permit to petitioner Cone. Petitioners seek to
withdraw their Petition for Certiorari on the ground that it has become moot and academic.

While ordinarily this Court would dismiss a petition that clearly appears to have become moot and
academic, the circumstances of this case and the nature of the questions raised by petitioners are such that
we do not feel justified in leaving those questions unanswered.4

Moreover, assuming that an alien employment permit has in fact been issued to petitioner Cone, the basis
of the reversal by the Secretary of Labor of his earlier decision does not appear in the record. If such
reversal is based on some view of constitutional law or labor law different from those here set out, then
such employment permit, if one has been issued, would appear open to serious legal objections.

ACCORDINGLY, the Court Resolved to DISMISS the Petition for certiorari for lack of merit. Costs
against petitioners.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 127162 June 5, 1998

JOSE ABACA, petitioner,

vs.
HONORABLE COURT OF APPEALS, and PEOPLE OF THE PHILIPPINES, respondents.

MARTINEZ, J.:

Petitioner Jose Abaca was tried before the Regional Trial Court of Calapan, Oriental Mindoro, for the
crime of illegal recruitment under Article 38 and 39 of President Decree No. 442, based on an
Information which reads:

That in the month of November 1988, and for a period prior and/or subsequent thereto, in
the Municipality of Calapan, Province of Oriental Mindoro, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused thru false manifestation
and fraudulent representation made to ROSELIA JIZ JANEO, ZENAIDA J. SUBANG,
RENITA J. JANEO and MELROSE S. PALOMO to the effect that he has the authority
to recruit workers for employment in Taipei, Taiwan and can facilitate the processing of
their necessary papers in connection therewith if given the necessary amount of money to
cover the costs of such recruitment and by means of other similar deceit when in truth
and in fact he is not authorized nor licensed to recruit, did then and there willfully and
unlawfully, and feloniously collect from the aforestated applicants the aggregate amount
of FOURTEEN TGHOUSAND PESOS (P14,000.00), Philippine Currency, the said
accused assuring and representing that the same would be used in depraying the
necessary expenses of the complainants' application for employment abroad and having
been convinced by said misrepresentation the complainants gave the said amount to the
herein accused, but the latter far from complying with his obligations, misapproprated
and converted to his own personal use and benefit the aforecited amount, to the damage
and prejudice of the said ROSELIA JIZ JANEO, ZENAIDA J. SUBANG, RENITA J.
JANEO and MELROSE S. PALOMO.

Contrary to Articles 38 and 39 of Presidential Decree No. 442, as amended otherwise

known as the Labor Code of the Philippines. 1

Arraigned on February 6, 1990, petitioner entered a plea of not guilty. Thereafer, trial ensued.

The prosecution's evidence, as summarized by the trial court, reads as follows:

 The gist of the testimonies of the four complainants revolves on how the accused
(petitioner herein) recruited them to work abroad and made them believe that the accused
could work out their papers in consideration of a certain sum of money. Specifically, the
four complainants similarly testified that the accused was introduced to them by his
brothers, Perferio and Guiding Abaca, whom they already knew for a long time.
Sometime in the month of November 1988, the accused, accompanied by his brothers,
misrepresented himself to be a licensed recruiter and convinced the four complainants
that for a consideration they could work abroad at Taipei either as a domestic helper or
factory worker with a salary ranging from $300 to $500 a month. The accused asked the
sum of P14,000.00 each, but the complainants requested if they could pay P6,000.00 first
and before departure they will complete the amount as demanded. Thus, the complainants
paid partial amount at the office of the accused at Five Ace Philippines located in Manila
and all of them gave their own down payment. Each complainant paid the accused
P1,500.00 allegedly to be used for the processing of the passport and the following
amounts for processing . . .

All the complainants were able to receive the passport from the accused.

From the foregoing, the complainants were able to pay the accused the aggregate amount
of P14,000.00, excluding the amount of P1,500.00 each for the passport.

It was agreed between the complainant and the accused that the balance of thier
obligation would be given on or before they leave for abroad. But since their payment,
the accused promised them to leave, first on or before December, 1988 and then anytime
in January of 1989, and then later. When the complainants sensed that they would not
leave anymore, they informed the brothers of the accuse whom they are familiar with,
complaining about the failure of the accused to send them abroad when they have already
paid the advance payment. The two brothers could not do otherwise but appeased them
and promised to contract their brother, the accused herein. Finally, the complainants were
able to confront the accused and demanded the return of their money, but the accused
merely promised to do so, until such time that they already filed their complaint with the
NBI.

On the other hand, petitioner's version of the case is likewise capsulized by the trial court in this wise, viz:

In trying to absolve himself from criminal liability, the accused shifted the blame to a
certain Mr. Reynaldo Tan to whom he alleges to have remitted the sums of money he
received from the complainants. To corroborate his version of the incident, the accused
presented one Alberto Tolentino, an employee of the Department of Public Works and
Highways who also was recruited by Mr. Abaca and who was also referred to Mr.
Reynaldo Tan.

xxx xxx xxx

When asked if he recruited complainants as they testified in Court, the accused denied the
truth of such statement. The accused stated that he did not recruit them and the truth was
he happened to be at the establishment of complainants in Calapan and they were able to
talk with the Janeo sisters who told them of their problems wherein they were notified to
vacate the establishment, and thus asked the accused to assist them in going abroad. The
accused told them that they were recruiting workers in the Middle East but he is
 discouraging female to work there because of the horrible experiences others have
undergone. The accused also told them that he was referring them to somebody whom he
knows are sending people to Taipei in the person of Mr. Reynaldo Tan. The complainants
agreed, after which the accused left for Manila where he was working. Then, one
morning, the two girls in the name of Melrose Paloma and Zenaida Subang called the
accused by phone and told him that they are interested in joining the Janeo sister to go to
Taipei and they said that they came across the calling card of the accused marked as
Exhibit "G". He admitted that the Five Ace Philippines is only engaged in trading and not
as recruitment agency. He informed the Court that he was connected with the recruitment
agency called WORK Incorporated-a licensed company.

After trial, judgment was rendered finding petitioner guilty of the crime charged, the dispositive portion
of which reads:

WHEREFORE, finding the accused guilty beyond reasonable doubt of the crime of
illegal recruitment under Art. 39 (c) of P.D. 442, he is hereby sentenced to suffer
imprisonment of four (4) years straight and to indemnify the complainants the aggregate
amount of P14,000.00 by way of civil liability, with the legal rate of interest from 1988
up to the time of payment.

SO ORDERED.

On appeal, the respondent Court of Appeals affirmed with modification the decision of the trial court. It
found petitioner guilty of illegal recruitment on a large-scale and sentenced him to life imprisonment and
a fine of P100,000.00. 2

Petitioner moved for reconsideration but the same was denied on November 7, 1996. 3

Petitioner now comes to us alleging that the respondent court committed grave and reversible errors of
law and/or acted with grave abuse of direction

1. In not considering the certification (Exh. 1) issued by the POEA

stating, among others, that WORK, Inc. was a duly licensed private
recruitment agency prior to August 20, 1989, and that petitioner was then
a manager and PDOS (Pre-Departure Orientation Seminar) Trainor in
said recruitment agency, and that, therefore, by virtue of his position as
manager and PDOS trainor of WORK, Inc., he had the authority to
undertake recruitment activities.

2. In not finding that petitioner, being a holder of authority, may not be

validly charged of illegal recruitment as defined by law in force at the
time of the alleged commission of the offense charged, much less,
convicted and sentenced to life imprisonment.

3. In declaring petitioner guilty of illegal recruitment in large scale and

sentencing him to a penalty of life imprisonment and to pay a fine of
P100,000.00

4. In finding that herein petitioner undertook recruitment activities, there

being a grave misapprehension of the facts.
The petition must be dismissed.

The crime of illegal recruitment is committed when two elements concur, namely: (1) the offender has no
valid license or authority required by law to enable one to lawfully engage in recruitment and placement
of workers; and (2) he undertakes either any activity any activity within the meaning of "recruitment and
placement" defined under Article 13(b), or any prohibited practices enumerated under Article 34 of the
Labor Code. 4

Under the first element, a nonlicensee or nonholder of authority is any person, corporation or entity which
has not been issued a valid license or authority to engage in recruitment and placement by the Secretary of
Labor, or whose license or authority has been suspended, revoked or canceled by the Philippine Overseas
Employment Administration (POEA) or the Secretary. 5 Agents or representatives appointed by a licensee
or a holder of authority but whose appointments are not previously authorized by POEA are within the
meaning of the term nonlicensee or nonholder of authority. 6

The record shows that petitioner is not a licensed recruiter as evidenced by the Certification 7 issued by
Mr. Hermogenes C. Mateo, Chief of the Licensing Branch, POEA. Testifying on the aforesaid
certification, Mr. Mateo said:

Q Now, how about a person by the name of Jose Abaca alias "Joe" or
Jose "Joe" Abaca listed in that particular list among those authorized by
the Philippine Overseas Employment Administration to recruit workers
for employment abroad?

A He is not included among those authorized to recruit in their personal

capacity like single proprietorship, sir. 8

Petitioner's theory that he has the authority to recruit by reason of his position as manager and Pre-
Departure Orientation Seminar Trainor (PDOS) of the WORKERS FOR OVERSEAS RECRUITMENT
KEY CENTER, INC. (WORK, Inc.), a licensed private recruitment agency is devoid of merit. The
Certification 9 issued by Mr. Mateo, which was relied upon by petitioner is nothing but an affirmation that
he is an officer of WORK, Inc. It does not, in any way, prove that petitioner has a license or authority to
undertake recruitment activities. Moreover, his employment with a licensed placement agency does
not ipso facto authorize him to recruit workers. This was clarified by Mr. Mateo when he testified that:

Q Now, will you please tell this Court if the employees of WORK,
Incorporated in particular or any agency or that matter which are license
to recruit workers for overseas employment authorized or licensed to
recruit workers for employment abroad?

xxx xxx xxx

A That will depend on the designation of the person concerned, sir.

FISCAL SENOREN:

Q What do you mean by it depends upon the designation of a person?

 A Well, if the designation states for example that he is only authorized to
market for overseas principal, that is the only function that he could do
so in representing the company. For example, if he is trainor, it so states
that he is authorized to serve as trainor in the conduct of pre-departure
orientation seminar, sir.

xxx xxx xxx

Q When a person is trainor or only a personnel manager, do you mean to

say that he cannot recruit for his agency?

A As far as the POEA is concerned, we only recognize the appointment

submitted to our office in his capacity as that, Your Honor. 10

Even assuming that WORK, Inc. had authorized petitioner, by reason of his position in the company, to
recruit workers, still, such authority was not previously approved by the POEA. 11

Again, Mr. Mateo explain that a licensee or holder of authority may authorize their employees to recruit
for the agency. However, said authority must be submitted to and approved by the POEA. 12 The
provision of Article 29 of the Labor Code is very clear on this:

Art. 29. Non-transferability of license or authority. No license or authority shall be

used directly or indirectly by any person other than the one in whose favor it was issued
of at any place other than stated in the license or authority, nor may such license or
authority be transferred, conveyed or assigned to any other person or entity. Any transfer
of business address, appointment or designation of any agent or representative including
the establishment of additional officers anywhere shall be subject to the prior approval of
the Department of Labor. (Emphasis Ours)

Moreover, there is nothing from the record which would show even by implication that petitioner was
acting for and in behalf of WORK, Inc. when he was dealing with the complainants. Petitioner gave his
calling card 13 and met with private complainants at his office at Five Ace, Phil., Malate, City of Manila.

Thus, complainant Roselia Janeo testified:

Q Where did you give the amount of P1,500.00 for your passport?

A I give (sic) the amount of P1,500.00 to Jose Abaca in Manila because

he instructed us to follow him in Manila.

Q Where in Manila did you give that P1,500.00?

A At Five Ace Philippines and this Five Ace Philippines is the agency
which according to Jose Abaca he is handling 14

Complainant Reneta Janeo also testified:

Q Miss witness, where did you give the amount of P6,000.00 to Mr. Jose
Abaca?
 A At Five Ace Philippines, sir.

Q What is this Five Ace Philippines?

A It is an office, sir.

Q And where is this Five Ace Philippines located?

A At Guerrero corner J. Nakpil St., Malate, sir. 15

Petitioner's testimony that he referred the private complainants to a certain Reynaldo Tan because
WORK, Inc. is deploying workers to the Middle East and other countries with bilateral agreement with
the Philippines undisputably show that he was not representing WORK, Inc. when he dealt with private
complainants. Petitioner recounted:

Q If that is so, Mr. Witness, why do you have to refer the complainants
to other company represented by Mr. Reynaldo Tan, if according to you,
the WORK Incorporated was duly licensed to engage in recruitment
business?

A Well, as I have said that I did not want them to be deployed to the
Middle East wherein we have authority to deploy to the Middle East.
Now, the fact that we do not have a bilateral agreement with Taipei but
the Taipei government is accepting employees from the Philippines on a
tourist visa and a tourist passport and visitors visa and as matter of fact,
we have no less than two hundred thousand Filipino workers in Taipei
right now under a visitor's visa on a tourist passport.

Q So your company is not engaged in sending workers for Taipei,

Taiwan I am referring to WORK Incorporated?

A Yes, sir.

Q Because, according to you, our government has no diplomatic relation.

A Bilated agreement, sir.

Q Bilated agreement with said country?

A Because the papers to be processed by the POEA, that cannot be

processed because our government has no bilateral agreement with the
said country.

Q And you want to impress upon this Court that all workers going to
Taipei, Taiwan work there unofficially without the sanction of our
government but on shall we say, unofficial capacity, am I right?

A Yes, unofficially in our country because they are working there on a

tourist visa. And that is not the problem of our country. This is the
 problem of the once accepting these people. Even a tourist visa, a tourist
passport.

Q So that is the reason, according to you, why you do not utilize your
company, the WORK Incorporated in connection with this particular
application of the complainants in going to Taipei, Taiwan?

A Yes, sir. 16 (Emphasis Ours)

It is clear therefore that petitioner never acted for and in behalf of WORK, Inc. when he recruited the
private complainants.

Going now to the second element of the crime charged, that is, the offender undertakes either any acivity
within the meaning of recruitment and placement, Article 13(b) of the Labor Code defines "recruitment
and placement," as follows:

Recruitment and placement refers to any act of

canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring
workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not; Provided, that any person or
entity which in any manner offers or promises for a fee employment to two or more
persons shall be deemed engaged in recruitment and placement. (Emphasis Supplied)

Petitioner's act of (1) representing to the private complainants that he can help them work in Taipei with a
monthly salary of $300 to $500; (2) requiring them to submit their ID pictures, birth certificates and bio-
data for their employment abroad; (3) demanding from them P12,000.00 as processing fee; and (4)
receiving from them certain amounts for the processing of their passports and other papers, are all
recruitment activities within the contemplation of the law.

The finding of the trial court in this regard is worth noting:

It has already been shown by the prosecution that accused was not licensed or authorized
by the POEA to recruit workers for abroad. And yet, despite such fact, accused, thru false
manifestation and fraudulent representation, made the complainants believe that he could
help them work abroad as household helper or factory worker at Taipei at a salary
ranging from $300 to $500, alleging that he has a friend who could help them work
abroad. Relying on this representation, complainants were constrained to pay the
aggregate amount of P14,000.00 as demanded by the accused besides the P1,500.00 each
for passport, and the accused issued a private receipt (not official or printed receipt)
evidencing such payment. With these receipts marked as Exhibits "A" to "E", "H" and "I"
and the issuance of the passport, ID pictures, birth certificate, bio-data and other personal
papers, the complainants were led to believe that accused could really help them work
abroad. Thus, after payment, accused assured complainants that they might be able to
leave in December of 1988. Come December 1988 and yet complainants were not able to
leave and was again promised by accused that they could leave the following month of
January, 1989. Again, complainants failed to leave, thus, they demanded from the
accused to return the money, otherwise, they would file a case against the accused in
court. 17
Petitioner further asserted that he did not recruit private complainants but only tried to help them by
referring them to one Reynaldo Tan who was allegedly licensed to recruit workers to Taiwan. This
posture, unfortunately will not exculpate him. Petitioner's act of referring private complainants to Tan is,
under the law, also considered a recruitment activity.

Finally, petitioner faults respondent court in finding him guilty of illegal recruitment in large scale which
has a higher penalty. He argues that he cannot be convicted of illegal recruitment in large scale because
the information charged him only with simple illegal recruitment. Having been sentenced by the
respondent court to a graver offense, petitioner claims that he was deprived of his constitutional right to
be informed of the true nature and cause of the accusation against him.

We do not agree.

The real nature of the criminal charge is determined not from the technical name given by the fiscal
appearing in the title of the information but by the actual recital of facts appearing in the complaint or
information. 18

Thus, where the allegations in the information clearly sets forth the essential elements of the crime
charged, the constitutional right of the accused to be informed of the nature and cause of his accusations
is not violated. 19

The information against petitioner has clearly recited all the elements of the crime of illegal recruitment at
large scale, namely:

1. the offender is a non-licensee or non-holder of authority to engage in recruitment and

placement activity,

2. the offender undertakes recruitment and placement activity defined under Article 13
(b), or any prohibited practices enumerated under Article 34, and

3. illegal recruitment is committed against three or more persons individually or as a

group. 20

All these elements were duly proven by the prosecution. Petitioner, as discussed earlier, is not
licensed or authorized to recruit overseas workers; he undertook recruitment activities defined
under Article 34 under the Labor Code and he recruited the four (4) complainant-workers, thus
making the crime illegal recruitment in large scale. The imposable penalty is life imprisonment
and a fine of One Hundred Thousand Pesos (P100,000.00) pursuant to Article 38 (b) 21 and
Article 39 (a) 22 of the Labor Code.

WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 145587 October 26, 2007

EDI-STAFFBUILDERS INTERNATIONAL, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and ELEAZAR S. GRAN, respondents.

DECISION

VELASCO, JR., J.:

The Case

This Petition for Review on Certiorari1 seeks to set aside the October 18, 2000 Decision2 of the Court of
Appeals (CA) in CA-G.R. SP No. 56120 which affirmed the January 15, 1999 Decision3 and September
30, 1999 Resolution4 rendered by the National Labor Relations Commission (NLRC) (Third Division) in
POEA ADJ (L) 94-06-2194, ordering Expertise Search International (ESI), EDI-Staffbuilders
International, Inc. (EDI), and Omar Ahmed Ali Bin Bechr Est. (OAB) jointly and severally to pay Eleazar
S. Gran (Gran) the amount of USD 16,150.00 as unpaid salaries.

The Facts

Petitioner EDI is a corporation engaged in recruitment and placement of Overseas Filipino Workers
(OFWs).5 ESI is another recruitment agency which collaborated with EDI to process the documentation
and deployment of private respondent to Saudi Arabia.

Private respondent Gran was an OFW recruited by EDI, and deployed by ESI to work for OAB, in
Riyadh, Kingdom of Saudi Arabia.6

It appears that OAB asked EDI through its October 3, 1993 letter for curricula vitae of qualified
applicants for the position of "Computer Specialist."7 In a facsimile transmission dated November 29,
1993, OAB informed EDI that, from the applicants' curricula vitae submitted to it for evaluation, it
selected Gran for the position of "Computer Specialist." The faxed letter also stated that if Gran agrees to
the terms and conditions of employment contained in it, one of which was a monthly salary of SR (Saudi
Riyal) 2,250.00 (USD 600.00), EDI may arrange for Gran's immediate dispatch.8

After accepting OAB's offer of employment, Gran signed an employment contract9 that granted him a
monthly salary of USD 850.00 for a period of two years. Gran was then deployed to Riyadh, Kingdom of
Saudi Arabia on February 7, 1994.

Upon arrival in Riyadh, Gran questioned the discrepancy in his monthly salaryhis employment contract
stated USD 850.00; while his Philippine Overseas Employment Agency (POEA) Information Sheet
indicated USD 600.00 only. However, through the assistance of the EDI office in Riyadh, OAB agreed to
pay Gran USD 850.00 a month.10
After Gran had been working for about five months for OAB, his employment was terminated through
OAB's July 9, 1994 letter,11 on the following grounds:

1. Non-compliance to contract requirements by the recruitment agency primarily on your salary

and contract duration.

2. Non-compliance to pre-qualification requirements by the recruitment agency[,] vide OAB

letter ref. F-5751-93, dated October 3, 1993.12

3. Insubordination or disobedience to Top Management Order and/or instructions (non-submittal

of daily activity reports despite several instructions).

On July 11, 1994, Gran received from OAB the total amount of SR 2,948.00 representing his final pay,
and on the same day, he executed a Declaration13 releasing OAB from any financial obligation or
otherwise, towards him.

After his arrival in the Philippines, Gran instituted a complaint, on July 21, 1994, against ESI/EDI, OAB,
Country Bankers Insurance Corporation, and Western Guaranty Corporation with the NLRC, National
Capital Region, Quezon City, which was docketed as POEA ADJ (L) 94-06-2194 for underpayment of
wages/salaries and illegal dismissal.

The Ruling of the Labor Arbiter

In his February 10, 1998 Decision,14 Labor Arbiter Manuel R. Caday, to whom Gran's case was assigned,
ruled that there was neither underpayment nor illegal dismissal.

The Labor Arbiter reasoned that there was no underpayment of salaries since according to the POEA-
Overseas Contract Worker (OCW) Information Sheet, Gran's monthly salary was USD 600.00, and in his
Confirmation of Appointment as Computer Specialist, his monthly basic salary was fixed at SR 2,500.00,
which was equivalent to USD 600.00.

Arbiter Caday also cited the Declaration executed by Gran, to justify that Gran had no claim for unpaid
salaries or wages against OAB.

With regard to the issue of illegal dismissal, the Labor Arbiter found that Gran failed to refute EDI's
allegations; namely, (1) that Gran did not submit a single activity report of his daily activity as dictated by
company policy; (2) that he was not qualified for the job as computer specialist due to his insufficient
knowledge in programming and lack of knowledge in ACAD system; (3) that Gran refused to follow
management's instruction for him to gain more knowledge of the job to prove his worth as computer
specialist; (4) that Gran's employment contract had never been substituted; (5) and that Gran was paid a
monthly salary of USD 850.00, and USD 350.00 monthly as food allowance.

Accordingly, the Labor Arbiter decided that Gran was validly dismissed from his work due to
insubordination, disobedience, and his failure to submit daily activity reports.

Thus, on February 10, 1998, Arbiter Caday dismissed Gran's complaint for lack of merit.

Dissatisfied, Gran filed an Appeal15 on April 6, 1998 with the NLRC, Third Division. However, it appears
from the records that Gran failed to furnish EDI with a copy of his Appeal Memorandum.
 The Ruling of the NLRC

The NLRC held that EDI's seemingly harmless transfer of Gran's contract to ESI is actually
"reprocessing," which is a prohibited transaction under Article 34 (b) of the Labor Code. This scheme
constituted misrepresentation through the conspiracy between EDI and ESI in misleading Gran and even
POEA of the actual terms and conditions of the OFW's employment. In addition, it was found that Gran
did not commit any act that constituted a legal ground for dismissal. The alleged non-compliance with
contractual stipulations relating to Gran's salary and contract duration, and the absence of pre-
qualification requirements cannot be attributed to Gran but to EDI, which dealt directly with OAB. In
addition, the charge of insubordination was not substantiated, and Gran was not even afforded the
required notice and investigation on his alleged offenses.

Thus, the NLRC reversed the Labor Arbiter's Decision and rendered a new one, the dispositive portion of
which reads:

WHEREFORE, the assailed decision is SET ASIDE. Respondents Expertise Search International,
Inc., EDI Staffbuilders Int'l., Inc. and Omar Ahmed Ali Bin Bechr Est. (OAB) are hereby ordered
jointly and severally liable to pay the complainant Eleazar Gran the Philippine peso equivalent at
the time of actual payment of SIXTEEN THOUSAND ONE HUNDRED FIFTY US DOLLARS
(US$16,150.00) representing his salaries for the unexpired portion of his contract.

SO ORDERED.16

Gran then filed a Motion for Execution of Judgment17 on March 29, 1999 with the NLRC and petitioner
receiving a copy of this motion on the same date.18

To prevent the execution, petitioner filed an Opposition19 to Gran's motion arguing that the Writ of
Execution cannot issue because it was not notified of the appellate proceedings before the NLRC and was
not given a copy of the memorandum of appeal nor any opportunity to participate in the appeal.

Seeing that the NLRC did not act on Gran's motion after EDI had filed its Opposition, petitioner filed, on
August 26, 1999, a Motion for Reconsideration of the NLRC Decision after receiving a copy of the
Decision on August 16, 1999.20

The NLRC then issued a Resolution21 denying petitioner's Motion for Reconsideration, ratiocinating that
the issues and arguments raised in the motion "had already been amply discussed, considered, and ruled
upon" in the Decision, and that there was "no cogent reason or patent or palpable error that warrant any
disturbance thereof."

Unconvinced of the NLRC's reasoning, EDI filed a Petition for Certiorari before the CA. Petitioner
claimed in its petition that the NLRC committed grave abuse of discretion in giving due course to the
appeal despite Gran's failure to perfect the appeal.

The Ruling of the Court of Appeals

The CA subsequently ruled on the procedural and substantive issues of EDI's petition.

On the procedural issue, the appellate court held that "Gran's failure to furnish a copy of his appeal
memorandum [to EDI was] a mere formal lapse, an excusable neglect and not a jurisdictional defect
which would justify the dismissal of his appeal."22 The court also held that petitioner EDI failed to prove
that private respondent was terminated for a valid cause and in accordance with due process; and that
Gran's Declaration releasing OAB from any monetary obligation had no force and effect. The appellate
court ratiocinated that EDI had the burden of proving Gran's incompetence; however, other than the
termination letter, no evidence was presented to show how and why Gran was considered to be
incompetent. The court held that since the law requires the recruitment agencies to subject OFWs to trade
tests before deployment, Gran must have been competent and qualified; otherwise, he would not have
been hired and deployed abroad.

As for the charge of insubordination and disobedience due to Gran's failure to submit a "Daily Activity
Report," the appellate court found that EDI failed to show that the submission of the "Daily Activity
Report" was a part of Gran's duty or the company's policy. The court also held that even if Gran was
guilty of insubordination, he should have just been suspended or reprimanded, but not dismissed.

The CA also held that Gran was not afforded due process, given that OAB did not abide by the twin
notice requirement. The court found that Gran was terminated on the same day he received the
termination letter, without having been apprised of the bases of his dismissal or afforded an opportunity to
explain his side.

Finally, the CA held that the Declaration signed by Gran did not bar him from demanding benefits to
which he was entitled. The appellate court found that the Declaration was in the form of a quitclaim, and
as such is frowned upon as contrary to public policy especially where the monetary consideration given in
the Declaration was very much less than what he was legally entitled tohis backwages amounting to
USD 16,150.00.

As a result of these findings, on October 18, 2000, the appellate court denied the petition to set aside the
NLRC Decision.

Hence, this instant petition is before the Court.

The Issues

Petitioner raises the following issues for our consideration:

I. WHETHER THE FAILURE OF GRAN TO FURNISH A COPY OF HIS APPEAL

MEMORANDUM TO PETITIONER EDI WOULD CONSTITUTE A JURISDICTIONAL
DEFECT AND A DEPRIVATION OF PETITIONER EDI'S RIGHT TO DUE PROCESS AS
WOULD JUSTIFY THE DISMISSAL OF GRAN'S APPEAL.

II. WHETHER PETITIONER EDI HAS ESTABLISHED BY WAY OF SUBSTANTIAL

EVIDENCE THAT GRAN'S TERMINATION WAS JUSTIFIABLE BY REASON OF
INCOMPETENCE. COROLLARY HERETO, WHETHER THE PRIETO VS. NLRC RULING,
AS APPLIED BY THE COURT OF APPEALS, IS APPLICABLE IN THE INSTANT CASE.

III. WHETHER PETITIONER HAS ESTABLISHED BY WAY OF SUBSTANTIAL

EVIDENCE THAT GRAN'S TERMINATION WAS JUSTIFIABLE BY REASON OF
INSUBORDINATION AND DISOBEDIENCE.

IV. WHETHER GRAN WAS AFFORDED DUE PROCESS PRIOR TO TERMINATION.

 V. WHETHER GRAN IS ENTITLED TO BACKWAGES FOR THE UNEXPIRED PORTION
OF HIS CONTRACT.23

The Court's Ruling

The petition lacks merit except with respect to Gran's failure to furnish EDI with his Appeal
Memorandum filed with the NLRC.

First Issue: NLRC's Duty is to Require Respondent to Provide Petitioner a Copy of the Appeal

Petitioner EDI claims that Gran's failure to furnish it a copy of the Appeal Memorandum constitutes a
jurisdictional defect and a deprivation of due process that would warrant a rejection of the appeal.

This position is devoid of merit.

In a catena of cases, it was ruled that failure of appellant to furnish a copy of the appeal to the adverse
party is not fatal to the appeal.

In Estrada v. National Labor Relations Commission,24 this Court set aside the order of the NLRC which
dismissed an appeal on the sole ground that the appellant did not furnish the appellee a memorandum of
appeal contrary to the requirements of Article 223 of the New Labor Code and Section 9, Rule XIII of its
Implementing Rules and Regulations.

Also, in J.D. Magpayo Customs Brokerage Corp. v. NLRC, the order of dismissal of an appeal to the
NLRC based on the ground that "there is no showing whatsoever that a copy of the appeal was served by
the appellant on the appellee"25was annulled. The Court ratiocinated as follows:

The failure to give a copy of the appeal to the adverse party was a mere formal lapse, an
excusable neglect. Time and again We have acted on petitions to review decisions of the Court of
Appeals even in the absence of proof of service of a copy thereof to the Court of Appeals as
required by Section 1 of Rule 45, Rules of Court. We act on the petitions and simply require
the petitioners to comply with the rule.26 (Emphasis supplied.)

The J.D. Magpayo ruling was reiterated in Carnation Philippines Employees Labor Union-FFW v.
National Labor Relations Commission,27 Pagdonsalan v. NLRC,28 and in Sunrise Manning Agency, Inc. v.
NLRC.29

Thus, the doctrine that evolved from these cases is that failure to furnish the adverse party with a copy of
the appeal is treated only as a formal lapse, an excusable neglect, and hence, not a jurisdictional defect.
Accordingly, in such a situation, the appeal should not be dismissed; however, it should not be given due
course either. As enunciated in J.D. Magpayo, the duty that is imposed on the NLRC, in such a case, is
to require the appellant to comply with the rule that the opposing party should be provided with a
copy of the appeal memorandum.

While Gran's failure to furnish EDI with a copy of the Appeal Memorandum is excusable, the abject
failure of the NLRC to order Gran to furnish EDI with the Appeal Memorandum constitutes grave abuse
of discretion.
The records reveal that the NLRC discovered that Gran failed to furnish EDI a copy of the Appeal
Memorandum. The NLRC then ordered Gran to present proof of service. In compliance with the order,
Gran submitted a copy of Camp Crame Post Office's list of mail/parcels sent on April 7, 1998.30 The post
office's list shows that private respondent Gran sent two pieces of mail on the same date: one addressed to
a certain Dan O. de Guzman of Legaspi Village, Makati; and the other appears to be addressed to Neil B.
Garcia (or Gran),31 of Ermita, Manilaboth of whom are not connected with petitioner.

This mailing list, however, is not a conclusive proof that EDI indeed received a copy of the Appeal
Memorandum.

Sec. 5 of the NLRC Rules of Procedure (1990) provides for the proof and completeness of service in
proceedings before the NLRC:

Section 5.32 Proof and completeness of service.The return is prima facie proof of the facts
indicated therein. Service by registered mail is complete upon receipt by the addressee or his
agent; but if the addressee fails to claim his mail from the post office within five (5) days from
the date of first notice of the postmaster, service shall take effect after such time. (Emphasis
supplied.)

Hence, if the service is done through registered mail, it is only deemed complete when the addressee or
his agent received the mail or after five (5) days from the date of first notice of the postmaster. However,
the NLRC Rules do not state what would constitute proper proof of service.

Sec. 13, Rule 13 of the Rules of Court, provides for proofs of service:

Section 13. Proof of service.Proof of personal service shall consist of a written admission of
the party served or the official return of the server, or the affidavit of the party serving, containing
a full statement of the date, place and manner of service. If the service is by ordinary mail, proof
thereof shall consist of an affidavit of the person mailing of facts showing compliance with
section 7 of this Rule. If service is made by registered mail, proof shall be made by such
affidavit and registry receipt issued by the mailing office. The registry return card shall be
filed immediately upon its receipt by the sender, or in lieu thereof the unclaimed letter
together with the certified or sworn copy of the notice given by the postmaster to the
addressee(emphasis supplied).

Based on the foregoing provision, it is obvious that the list submitted by Gran is not conclusive proof that
he had served a copy of his appeal memorandum to EDI, nor is it conclusive proof that EDI received its
copy of the Appeal Memorandum. He should have submitted an affidavit proving that he mailed the
Appeal Memorandum together with the registry receipt issued by the post office; afterwards, Gran should
have immediately filed the registry return card.

Hence, after seeing that Gran failed to attach the proof of service, the NLRC should not have simply
accepted the post office's list of mail and parcels sent; but it should have required Gran to properly
furnish the opposing parties with copies of his Appeal Memorandum as prescribed in J.D.
Magpayo and the other cases. The NLRC should not have proceeded with the adjudication of the case,
as this constitutes grave abuse of discretion.

The glaring failure of NLRC to ensure that Gran should have furnished petitioner EDI a copy of the
Appeal Memorandum before rendering judgment reversing the dismissal of Gran's complaint constitutes
an evasion of the pertinent NLRC Rules and established jurisprudence. Worse, this failure deprived EDI
of procedural due process guaranteed by the Constitution which can serve as basis for the nullification of
proceedings in the appeal before the NLRC. One can only surmise the shock and dismay that OAB, EDI,
and ESI experienced when they thought that the dismissal of Gran's complaint became final, only to
receive a copy of Gran's Motion for Execution of Judgment which also informed them that Gran had
obtained a favorable NLRC Decision. This is not level playing field and absolutely unfair and
discriminatory against the employer and the job recruiters. The rights of the employers to procedural due
process cannot be cavalierly disregarded for they too have rights assured under the Constitution.

However, instead of annulling the dispositions of the NLRC and remanding the case for further
proceedings we will resolve the petition based on the records before us to avoid a protracted litigation.33

The second and third issues have a common matterwhether there was just cause for Gran's dismissal
hence, they will be discussed jointly.

Second and Third Issues: Whether Gran's dismissal is justifiable by reason of incompetence,
insubordination, and disobedience

In cases involving OFWs, the rights and obligations among and between the OFW, the local
recruiter/agent, and the foreign employer/principal are governed by the employment contract. A contract
freely entered into is considered law between the parties; and hence, should be respected. In formulating
the contract, the parties may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.34

In the present case, the employment contract signed by Gran specifically states that Saudi Labor Laws
will govern matters not provided for in the contract (e.g. specific causes for termination, termination
procedures, etc.). Being the law intended by the parties (lex loci intentiones) to apply to the contract,
Saudi Labor Laws should govern all matters relating to the termination of the employment of Gran.

In international law, the party who wants to have a foreign law applied to a dispute or case has the burden
of proving the foreign law. The foreign law is treated as a question of fact to be properly pleaded and
proved as the judge or labor arbiter cannot take judicial notice of a foreign law. He is presumed to know
only domestic or forum law.35

Unfortunately for petitioner, it did not prove the pertinent Saudi laws on the matter; thus, the International
Law doctrine of presumed-identity approach or processual presumption comes into play.36 Where a
foreign law is not pleaded or, even if pleaded, is not proved, the presumption is that foreign law is the
same as ours.37 Thus, we apply Philippine labor laws in determining the issues presented before us.

Petitioner EDI claims that it had proven that Gran was legally dismissed due to incompetence and
insubordination or disobedience.

This claim has no merit.

In illegal dismissal cases, it has been established by Philippine law and jurisprudence that the employer
should prove that the dismissal of employees or personnel is legal and just.

Section 33 of Article 277 of the Labor Code38 states that:

ART. 277. MISCELLANEOUS PROVISIONS39

 (b) Subject to the constitutional right of workers to security of tenure and their right to be
protected against dismissal except for a just and authorized cause and without prejudice to the
requirement of notice under Article 283 of this Code, the employer shall furnish the worker
whose employment is sought to be terminated a written notice containing a statement of the
causes for termination and shall afford the latter ample opportunity to be heard and to defend
himself with the assistance of his representative if he so desires in accordance with company rules
and regulations promulgated pursuant to guidelines set by the Department of Labor and
Employment. Any decision taken by the employer shall be without prejudice to the right of the
workers to contest the validity or legality of his dismissal by filing a complaint with the regional
branch of the National Labor Relations Commission. The burden of proving that the
termination was for a valid or authorized cause shall rest on the employer. x x x

In many cases, it has been held that in termination disputes or illegal dismissal cases, the employer has the
burden of proving that the dismissal is for just and valid causes; and failure to do so would necessarily
mean that the dismissal was not justified and therefore illegal.40 Taking into account the character of the
charges and the penalty meted to an employee, the employer is bound to adduce clear, accurate,
consistent, and convincing evidence to prove that the dismissal is valid and legal.41 This is consistent with
the principle of security of tenure as guaranteed by the Constitution and reinforced by Article 277 (b) of
the Labor Code of the Philippines.42

In the instant case, petitioner claims that private respondent Gran was validly dismissed for just cause,
due to incompetence and insubordination or disobedience. To prove its allegations, EDI submitted two
letters as evidence. The first is the July 9, 1994 termination letter,43 addressed to Gran, from Andrea E.
Nicolaou, Managing Director of OAB. The second is an unsigned April 11, 1995 letter44 from OAB
addressed to EDI and ESI, which outlined the reasons why OAB had terminated Gran's employment.

Petitioner claims that Gran was incompetent for the Computer Specialist position because he had
"insufficient knowledge in programming and zero knowledge of [the] ACAD system."45 Petitioner also
claims that Gran was justifiably dismissed due to insubordination or disobedience because he continually
failed to submit the required "Daily Activity Reports."46However, other than the abovementioned letters,
no other evidence was presented to show how and why Gran was considered incompetent, insubordinate,
or disobedient. Petitioner EDI had clearly failed to overcome the burden of proving that Gran was validly
dismissed.

Petitioner's imputation of incompetence on private respondent due to his "insufficient knowledge in

programming and zero knowledge of the ACAD system" based only on the above mentioned letters,
without any other evidence, cannot be given credence.

An allegation of incompetence should have a factual foundation. Incompetence may be shown by

weighing it against a standard, benchmark, or criterion. However, EDI failed to establish any such bases
to show how petitioner found Gran incompetent.

In addition, the elements that must concur for the charge of insubordination or willful disobedience to
prosper were not present.

In Micro Sales Operation Network v. NLRC, we held that:

For willful disobedience to be a valid cause for dismissal, the following twin elements must
concur: (1) the employee's assailed conduct must have been willful, that is, characterized by a
wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful,
 made known to the employee and must pertain to the duties which he had been engaged to
discharge.47

EDI failed to discharge the burden of proving Gran's insubordination or willful disobedience. As
indicated by the second requirement provided for in Micro Sales Operation Network, in order to justify
willful disobedience, we must determine whether the order violated by the employee is reasonable,
lawful, made known to the employee, and pertains to the duties which he had been engaged to discharge.
In the case at bar, petitioner failed to show that the order of the company which was violatedthe
submission of "Daily Activity Reports"was part of Gran's duties as a Computer Specialist. Before the
Labor Arbiter, EDI should have provided a copy of the company policy, Gran's job description, or any
other document that would show that the "Daily Activity Reports" were required for submission by the
employees, more particularly by a Computer Specialist.

Even though EDI and/or ESI were merely the local employment or recruitment agencies and not the
foreign employer, they should have adduced additional evidence to convincingly show that Gran's
employment was validly and legally terminated. The burden devolves not only upon the foreign-based
employer but also on the employment or recruitment agency for the latter is not only an agent of the
former, but is also solidarily liable with the foreign principal for any claims or liabilities arising from the
dismissal of the worker.48

Thus, petitioner failed to prove that Gran was justifiably dismissed due to incompetence,
insubordination, or willful disobedience.

Petitioner also raised the issue that Prieto v. NLRC,49 as used by the CA in its Decision, is not applicable
to the present case.

In Prieto, this Court ruled that "[i]t is presumed that before their deployment, the petitioners were
subjected to trade tests required by law to be conducted by the recruiting agency to insure employment of
only technically qualified workers for the foreign principal."50 The CA, using the ruling in the said case,
ruled that Gran must have passed the test; otherwise, he would not have been hired. Therefore, EDI was at
fault when it deployed Gran who was allegedly "incompetent" for the job.

According to petitioner, the Prieto ruling is not applicable because in the case at hand, Gran
misrepresented himself in his curriculum vitae as a Computer Specialist; thus, he was not qualified for the
job for which he was hired.

We disagree.

The CA is correct in applying Prieto. The purpose of the required trade test is to weed out incompetent
applicants from the pool of available workers. It is supposed to reveal applicants with false educational
backgrounds, and expose bogus qualifications. Since EDI deployed Gran to Riyadh, it can be presumed
that Gran had passed the required trade test and that Gran is qualified for the job. Even if there was no
objective trade test done by EDI, it was still EDI's responsibility to subject Gran to a trade test; and its
failure to do so only weakened its position but should not in any way prejudice Gran. In any case, the
issue is rendered moot and academic because Gran's incompetency is unproved.

Fourth Issue: Gran was not Afforded Due Process

As discussed earlier, in the absence of proof of Saudi laws, Philippine Labor laws and regulations shall
govern the relationship between Gran and EDI. Thus, our laws and rules on the requisites of due process
relating to termination of employment shall apply.

Petitioner EDI claims that private respondent Gran was afforded due process, since he was allowed to
work and improve his capabilities for five months prior to his termination.51 EDI also claims that the
requirements of due process, as enunciated in Santos, Jr. v. NLRC,52 and Malaya Shipping Services, Inc.
v. NLRC,53 cited by the CA in its Decision, were properly observed in the present case.

This position is untenable.

In Agabon v. NLRC,54 this Court held that:

Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must
give the employee two written notices and a hearing or opportunity to be heard if requested by the
employee before terminating the employment: a notice specifying the grounds for which
dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes
under Articles 283 and 284, the employer must give the employee and the Department of Labor
and Employment written notices 30 days prior to the effectivity of his separation.

Under the twin notice requirement, the employees must be given two (2) notices before their employment
could be terminated: (1) a first notice to apprise the employees of their fault, and (2) a second notice to
communicate to the employees that their employment is being terminated. In between the first and second
notice, the employees should be given a hearing or opportunity to defend themselves personally or by
counsel of their choice.55

A careful examination of the records revealed that, indeed, OAB's manner of dismissing Gran fell short of
the two notice requirement. While it furnished Gran the written notice informing him of his dismissal, it
failed to furnish Gran the written notice apprising him of the charges against him, as prescribed by the
Labor Code.56 Consequently, he was denied the opportunity to respond to said notice. In addition, OAB
did not schedule a hearing or conference with Gran to defend himself and adduce evidence in support of
his defenses. Moreover, the July 9, 1994 termination letter was effective on the same day. This shows that
OAB had already condemned Gran to dismissal, even before Gran was furnished the termination letter. It
should also be pointed out that OAB failed to give Gran the chance to be heard and to defend himself with
the assistance of a representative in accordance with Article 277 of the Labor Code. Clearly, there was no
intention to provide Gran with due process. Summing up, Gran was notified and his employment
arbitrarily terminated on the same day, through the same letter, and for unjustified grounds.
Obviously, Gran was not afforded due process.

Pursuant to the doctrine laid down in Agabon,57 an employer is liable to pay nominal damages as
indemnity for violating the employee's right to statutory due process. Since OAB was in breach of the due
process requirements under the Labor Code and its regulations, OAB, ESI, and EDI, jointly and
solidarily, are liable to Gran in the amount of PhP 30,000.00 as indemnity.

Fifth and Last Issue: Gran is Entitled to Backwages

We reiterate the rule that with regard to employees hired for a fixed period of employment, in cases
arising before the effectivity of R.A. No. 804258 (Migrant Workers and Overseas Filipinos Act) on August
25, 1995, that when the contract is for a fixed term and the employees are dismissed without just cause,
they are entitled to the payment of their salaries corresponding to the unexpired portion of their
contract.59 On the other hand, for cases arising after the effectivity of R.A. No. 8042, when the
termination of employment is without just, valid or authorized cause as defined by law or contract, the
worker shall be entitled to the full reimbursement of his placement fee with interest of twelve percent
(12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3)
months for every year of the unexpired term whichever is less.60

In the present case, the employment contract provides that the employment contract shall be valid for a
period of two (2) years from the date the employee starts to work with the employer.61 Gran arrived in
Riyadh, Saudi Arabia and started to work on February 7, 1994;62 hence, his employment contract is until
February 7, 1996. Since he was illegally dismissed on July 9, 1994, before the effectivity of R.A. No.
8042, he is therefore entitled to backwages corresponding to the unexpired portion of his contract, which
was equivalent to USD 16,150.

Petitioner EDI questions the legality of the award of backwages and mainly relies on the Declaration
which is claimed to have been freely and voluntarily executed by Gran. The relevant portions of the
Declaration are as follows:

I, ELEAZAR GRAN (COMPUTER SPECIALIST) AFTER RECEIVING MY FINAL

SETTLEMENT ON THIS DATE THE AMOUNT OF:

S.R. 2,948.00 (SAUDI RIYALS TWO THOUSAND NINE

HUNDRED FORTY EIGHT ONLY)

REPRESENTING COMPLETE PAYMENT (COMPENSATION) FOR THE SERVICES I

RENDERED TO OAB ESTABLISHMENT.

I HEREBY DECLARE THAT OAB EST. HAS NO FINANCIAL OBLIGATION IN MY

FAVOUR AFTER RECEIVING THE ABOVE MENTIONED AMOUNT IN CASH.

I STATE FURTHER THAT OAB EST. HAS NO OBLIGATION TOWARDS ME IN

WHATEVER FORM.

I ATTEST TO THE TRUTHFULNESS OF THIS STATEMENT BY AFFIXING MY

SIGNATURE VOLUNTARILY.

SIGNED.
ELEAZAR GRAN

Courts must undertake a meticulous and rigorous review of quitclaims or waivers, more particularly those
executed by employees. This requirement was clearly articulated by Chief Justice Artemio V. Panganiban
in Land and Housing Development Corporation v. Esquillo:

Quitclaims, releases and other waivers of benefits granted by laws or contracts in favor of
workers should be strictly scrutinized to protect the weak and the disadvantaged. The waivers
should be carefully examined, in regard not only to the words and terms used, but also the
factual circumstances under which they have been executed.63 (Emphasis supplied.)
This Court had also outlined in Land and Housing Development Corporation, citing Periquet v.
NLRC,64 the parameters for valid compromise agreements, waivers, and quitclaims:

Not all waivers and quitclaims are invalid as against public policy. If the agreement was
voluntarily entered into and represents a reasonable settlement, it is binding on the parties and
may not later be disowned simply because of a change of mind. It is only where there is clear
proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of
settlement are unconscionable on its face, that the law will step in to annul the questionable
transaction. But where it is shown that the person making the waiver did so voluntarily, with
full understanding of what he was doing, and the consideration for the quitclaim is credible
and reasonable, the transaction must be recognized as a valid and binding undertaking.
(Emphasis supplied.)

Is the waiver and quitclaim labeled a Declaration valid? It is not.

The Court finds the waiver and quitclaim null and void for the following reasons:

1. The salary paid to Gran upon his termination, in the amount of SR 2,948.00, is unreasonably low. As
correctly pointed out by the court a quo, the payment of SR 2,948.00 is even lower than his monthly
salary of SR 3,190.00 (USD 850.00). In addition, it is also very much less than the USD 16,150.00 which
is the amount Gran is legally entitled to get from petitioner EDI as backwages.

2. The Declaration reveals that the payment of SR 2,948.00 is actually the payment for Gran's salary for
the services he rendered to OAB as Computer Specialist. If the Declaration is a quitclaim, then the
consideration should be much much more than the monthly salary of SR 3,190.00 (USD 850.00)
although possibly less than the estimated Gran's salaries for the remaining duration of his contract and
other benefits as employee of OAB. A quitclaim will understandably be lower than the sum total of the
amounts and benefits that can possibly be awarded to employees or to be earned for the remainder of the
contract period since it is a compromise where the employees will have to forfeit a certain portion of the
amounts they are claiming in exchange for the early payment of a compromise amount. The court may
however step in when such amount is unconscionably low or unreasonable although the employee
voluntarily agreed to it. In the case of the Declaration, the amount is unreasonably small compared to the
future wages of Gran.

3. The factual circumstances surrounding the execution of the Declaration would show that Gran did not
voluntarily and freely execute the document. Consider the following chronology of events:

a. On July 9, 1994, Gran received a copy of his letter of termination;

b. On July 10, 1994, Gran was instructed to depart Saudi Arabia and required to pay his plane
ticket;65

c. On July 11, 1994, he signed the Declaration;

d. On July 12, 1994, Gran departed from Riyadh, Saudi Arabia; and

e. On July 21, 1994, Gran filed the Complaint before the NLRC.
The foregoing events readily reveal that Gran was "forced" to sign the Declaration and constrained to
receive the amount of SR 2,948.00 even if it was against his willsince he was told on July 10, 1994 to
leave Riyadh on July 12, 1994. He had no other choice but to sign the Declaration as he needed the
amount of SR 2,948.00 for the payment of his ticket. He could have entertained some apprehensions as to
the status of his stay or safety in Saudi Arabia if he would not sign the quitclaim.

4. The court a quo is correct in its finding that the Declaration is a contract of adhesion which should be
construed against the employer, OAB. An adhesion contract is contrary to public policy as it leaves the
weaker partythe employeein a "take-it-or-leave-it" situation. Certainly, the employer is being unjust
to the employee as there is no meaningful choice on the part of the employee while the terms are
unreasonably favorable to the employer.66

Thus, the Declaration purporting to be a quitclaim and waiver is unenforceable under Philippine laws in
the absence of proof of the applicable law of Saudi Arabia.

In order to prevent disputes on the validity and enforceability of quitclaims and waivers of employees
under Philippine laws, said agreements should contain the following:

1. A fixed amount as full and final compromise settlement;

2. The benefits of the employees if possible with the corresponding amounts, which the employees are
giving up in consideration of the fixed compromise amount;

3. A statement that the employer has clearly explained to the employee in English, Filipino, or in the
dialect known to the employeesthat by signing the waiver or quitclaim, they are forfeiting or
relinquishing their right to receive the benefits which are due them under the law; and

4. A statement that the employees signed and executed the document voluntarily, and had fully
understood the contents of the document and that their consent was freely given without any threat,
violence, duress, intimidation, or undue influence exerted on their person.

It is advisable that the stipulations be made in English and Tagalog or in the dialect known to the
employee. There should be two (2) witnesses to the execution of the quitclaim who must also sign the
quitclaim. The document should be subscribed and sworn to under oath preferably before any
administering official of the Department of Labor and Employment or its regional office, the Bureau of
Labor Relations, the NLRC or a labor attach in a foreign country. Such official shall assist the parties
regarding the execution of the quitclaim and waiver.67 This compromise settlement becomes final and
binding under Article 227 of the Labor Code which provides that:

[A]ny compromise settlement voluntarily agreed upon with the assistance of the Bureau of Labor
Relations or the regional office of the DOLE, shall be final and binding upon the parties and the
NLRC or any court "shall not assume jurisdiction over issues involved therein except in case of
non-compliance thereof or if there is prima facie evidence that the settlement was obtained
through fraud, misrepresentation, or coercion.

It is made clear that the foregoing rules on quitclaim or waiver shall apply only to labor contracts of
OFWs in the absence of proof of the laws of the foreign country agreed upon to govern said contracts.
Otherwise, the foreign laws shall apply.
WHEREFORE, the petition is DENIED. The October 18, 2000 Decision in CA-G.R. SP No. 56120 of
the Court of Appeals affirming the January 15, 1999 Decision and September 30, 1999 Resolution of the
NLRC

is AFFIRMED with the MODIFICATION that petitioner EDI-Staffbuilders International, Inc. shall pay
the amount of PhP 30,000.00 to respondent Gran as nominal damages for non-compliance with statutory
due process.

No costs.

SO ORDERED.
SECOND DIVISION

PROFESSIONAL VIDEO, INC., G.R. No. 155504

Petitioner,
Present:

QUISUMBING, J., Chairperson,

*
YNARES-SANTIAGO,
**
CHICO-NAZARIO,
***
- versus - LEONARDO-DE CASTRO, and
BRION, JJ.

Promulgated:
TECHNICAL EDUCATION AND SKILLS
DEVELOPMENT AUTHORITY, June 26, 2009
Respondent.

x ---------------------------------------------------------------------------------------------------------- x

DECISION

BRION, J.:

We resolve the petition filed by Professional Video, Inc. (PROVI)[1] to annul and set aside the
Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 67599, and its subsequent Order denying
PROVIs motion for reconsideration.[3] The assailed CA decision nullified:
a. the Order[4] dated July 16, 2001 of the Regional Trial Court (RTC), Pasig City, in
Civil Case No. 68527, directing the attachment/garnishment of the properties of
respondent Technical Education and Skills Development Authority (TESDA) amounting
to Thirty Five Million Pesos (P35,000,000.00); and
b. the RTCs August 24, 2001 Order[5] denying respondent TESDAs motion to
discharge/quash writ of attachment.

THE FACTUAL BACKGROUND

PROVI is an entity engaged in the sale of high technology equipment, information technology
products and broadcast devices, including the supply of plastic card printing and security facilities.
 TESDA is an instrumentality of the government established under Republic Act (R.A.) No. 7796
(the TESDA Act of 1994) and attached to the Department of Labor and Employment (DOLE) to develop
and establish a national system of skills standardization, testing, and certification in the country. [6] To
fulfill this mandate, it sought to issue security-printed certification and/or identification polyvinyl (PVC)
cards to trainees who have passed the certification process.

TESDAs Pre-Qualification Bids Award Committee (PBAC) conducted two (2) public biddings
on June 25, 1999 and July 22, 1999 for the printing and encoding of PVC cards. A failure of bidding
resulted in both instances since only two (2) bidders PROVI and Sirex Phils. Corp. submitted proposals.

Due to the failed bidding, the PBAC recommended that TESDA enter into a negotiated contract
with PROVI. On December 29, 1999, TESDA and PROVI signed and executed their Contract Agreement
Project: PVC ID Card Issuance (the Contract Agreement) for the provision of goods and services in the
printing and encoding of PVC cards.[7] Under this Contract Agreement, PROVI was to provide TESDA
with the system and equipment compliant with the specifications defined in the Technical Proposal. In
return, TESDA would pay PROVI the amount of Thirty-Nine Million Four Hundred and Seventy-Five
Thousand Pesos (P39,475,000) within fifteen (15) days after TESDAs acceptance of the contracted goods
and services.

On August 24, 2000, TESDA and PROVI executed an Addendum to the Contract Agreement
Project: PVC ID Card Issuance (Addendum),[8]whose terms bound PROVI to deliver one hundred percent
(100%) of the enumerated supplies to TESDA consisting of five hundred thousand (500,000) pieces of
security foil; five (5) pieces of security die with TESDA seal; five hundred thousand (500,000) pieces of
pre-printed and customized identification cards; one hundred thousand (100,000) pieces of scannable
answer sheets; and five hundred thousand (500,000) customized TESDA holographic laminate. In
addition, PROVI would install and maintain the following equipment: one (1) unit of Micropoise, two (2)
units of card printer, three (3) units of flatbed scanner, one (1) unit of OMR scanner, one (1) unit of
Server, and seven (7) units of personal computer.

TESDA in turn undertook to pay PROVI thirty percent (30%) of the total cost of the supplies
within thirty (30) days after receipt and acceptance of the contracted supplies, with the balance payable
within thirty (30) days after the initial payment.

According to PROVI, it delivered the following items to TESDA on the dates indicated:
 Date Particulars Amount

26 April 2000 48,500 pre-printed cards P 2,764,500.00

07 June 2000 330,000 pre-printed cards 18,810,000.00
07 August 2000 121,500 pre-printed cards 6,925,500.00
26 April 2000 100,000 scannable answer sheets 600,000.00
06 June 2000 5 Micro-Poise customized die 375,000.00
13 June 2000 35 boxes @ 15,000 imp/box 10,000,000.00
Custom hologram Foil
Total P 39,475,000.00

PROVI further alleged that out of TESDAs liability of P39,475,000.00, TESDA paid PROVI
only P3,739,500.00, leaving an outstanding balance of P35,735,500.00, as evidenced by PROVIs
Statement of Account.[9] Despite the two demand letters dated March 8 and April 27, 2001 that PROVI
sent TESDA,[10] the outstanding balance remained unpaid.

On July 11, 2001, PROVI filed with the RTC a complaint for sum of money with damages
against TESDA. PROVI additionally prayed for the issuance of a writ of preliminary
attachment/garnishment against TESDA. The case was docketed as Civil Case No. 68527. In an Order
dated July 16, 2001, the RTC granted PROVIs prayer and issued a writ of preliminary attachment against
the properties of TESDA not exempt from execution in the amount of P35,000,000.00.[11]

TESDA responded on July 24, 2001 by filing a Motion to Discharge/Quash the Writ of
Attachment, arguing mainly that public funds cannot be the subject of garnishment.[12] The RTC denied
TESDAs motion, and subsequently ordered the manager of the Land Bank of the Philippines to produce
TESDAs bank statement for the garnishment of the covered amount.[13]

Faced with these rulings, TESDA filed a Petition for Certiorari with the CA to question the RTC
orders, imputing grave abuse of discretion amounting to lack or excess of jurisdiction on the trial court for
issuing a writ of preliminary attachment against TESDAs public funds.[14]

The CA set aside the RTCs orders after finding that: (a) TESDAs funds are public in nature and,
therefore, exempt from garnishment; and (b) TESDAs purchase of the PVC cards was a necessary
incident of its governmental function; consequently, it ruled that there was no legal basis for the issuance
of a writ of preliminary attachment/garnishment.[15] The CA subsequently denied PROVIs motion for
reconsideration;[16] hence, the present petition.

THE PETITION
The petition submits to this Court the single issue of whether or not the writ of attachment against
TESDA and its funds, to cover PROVIs claim against TESDA, is valid. The issue involves a pure
question of law and requires us to determine whether the CA was correct in ruling that the RTC gravely
abused its discretion in issuing a writ of attachment against TESDA.

PROVI argues that the CA should have dismissed TESDAs petition for certiorari as the RTC did not
commit any grave abuse of discretion when it issued the Orders dated July 16, 2001 and August 24, 2001.
According to PROVI, the RTC correctly found that when TESDA entered into a purely commercial
contract with PROVI, TESDA went to the level of an ordinary private citizen and could no longer use the
defense of state immunity from suit. PROVI further contends that it has alleged sufficient ultimate facts in
the affidavit it submitted to support its application for a writ of preliminary attachment. Lastly, PROVI
maintains that sufficient basis existed for the RTCs grant of the writ of preliminary attachment, since
TESDA fraudulently misapplied or embezzled the money earmarked for the payment of the contracted
supplies and services, as evidenced by the Certification as to Availability of Funds.

TESDA claims that it entered the Contract Agreement and Addendum in the performance of its
governmental function to develop and establish a national system of skills standardization, testing, and
certification; in the performance of this governmental function, TESDA is immune from suit. Even
assuming that it had impliedly consented to be sued by entering into a contract with PROVI, TESDA
posits that the RTC still did not have the power to garnish or attach its funds since these are public funds.
Lastly, TESDA points out that PROVI failed to comply with the elements for the valid issuance of a writ
of preliminary attachment, as set forth in Section 1, Rule 57 of the 1997 Rules of Civil Procedure.

THE COURTS RULING

We find, as the CA did, that the RTCs questioned order involved a gross misreading of the
law and jurisprudence amounting to action in excess of its jurisdiction. Hence, we resolve to DENY
PROVIs petition for lack of merit.

TESDA is an instrumentality
of the government undertaking governmental
functions.
R.A. No. 7796 created the Technical Education and Skills Development
Authority or TESDA under the declared policy of the State to provide relevant, accessible, high quality
and efficient technical education and skills development in support of the development of high quality
Filipino middle-level manpower responsive to and in accordance with Philippine development goals and
priorities.[17] TESDA replaced and absorbed the National Manpower and Youth Council, the Bureau of
Technical and Vocational Education and the personnel and functions pertaining to technical-vocational
education in the regional offices of the Department of Education, Culture and Sports and the
apprenticeship program of the Bureau of Local Employment of the DOLE.[18] Thus, TESDA is an
unincorporated instrumentality of the government operating under its own charter.

Among others, TESDA is empowered to: approve trade skills standards and trade tests as
established and conducted by private industries; establish and administer a system of accreditation of both
public and private institutions; establish, develop and support the institutions' trainors' training and/or
programs; exact reasonable fees and charges for such tests and trainings conducted, and retain such
earnings for its own use, subject to guidelines promulgated by the Authority; and perform such other
duties and functions necessary to carry out the provisions of the Act, consistent with the purposes of the
creation of TESDA.[19]

Within TESDAs structure, as provided by R.A. No. 7769, is a Skills Standards and Certification
Office expressly tasked, among others, to develop and establish a national system of skills
standardization, testing and certification in the country; and to conduct research and development on
various occupational areas in order to recommend policies, rules and regulations for effective and
efficient skills standardization, testing and certification system in the country.[20] The law likewise
mandates that [T]here shall be national occupational skills standards to be established by TESDA-
accredited industry committees. The TESDA shall develop and implement a certification and
accreditation program in which private groups and trade associations are accredited to conduct approved
trade tests, and the local government units to promote such trade testing activities in their respective areas
in accordance with the guidelines to be set by the TESDA. The Secretary of Labor and Employment shall
determine the occupational trades for mandatory certification. All certificates relating to the national
trade skills testing and certification system shall be issued by the TESDA through its Secretariat.[21]

All these measures are undertaken pursuant to the constitutional command that [T]he State
affirms labor as a primary social economic force, and shall protect the rights of workers and promote their
welfare;[22] that [T]he State shall protect and promote the right of all citizens to quality education at all
levels, and shall take appropriate steps to make such education accessible to all; [23] in order to afford
protection to labor and promote full employment and equality of employment opportunities for all.[24]
 Under these terms, both constitutional and statutory, we do not believe that the role and status of
TESDA can seriously be contested: it is an unincorporated instrumentality of the government, directly
attached to the DOLE through the participation of the Secretary of Labor as its Chairman, for the
performance of governmental functions i.e., the handling of formal and non-formal education and
training, and skills development. As an unincorporated instrumentality operating under a specific charter,
it is equipped with both express and implied powers,[25]and all State immunities fully apply to it.[26]

TESDA, as an agency of the State, cannot be

sued without its consent.

The rule that a state may not be sued without its consent is embodied in Section 3, Article XVI of
the 1987 Constitution and has been an established principle that antedates this Constitution.[27] It is as well
a universally recognized principle of international law that exempts a state and its organs from the
jurisdiction of another state.[28] The principle is based on the very essence of sovereignty, and on the
practical ground that there can be no legal right as against the authority that makes the law on which the
right depends.[29] It also rests on reasons of public policy that public service would be hindered, and the
public endangered, if the sovereign authority could be subjected to law suits at the instance of every
citizen and, consequently, controlled in the uses and dispositions of the means required for the proper
administration of the government.[30]

The proscribed suit that the state immunity principle covers takes on various forms, namely: a suit
against the Republic by name; a suit against an unincorporated government agency; a suit against a
government agency covered by a charter with respect to the agencys performance of governmental
functions; and a suit that on its face is against a government officer, but where the ultimate liability will
fall on the government. In the present case, the writ of attachment was issued against a government
agency covered by its own charter. As discussed above, TESDA performs governmental functions, and
the issuance of certifications is a task within its function of developing and establishing a system of skills
standardization, testing, and certification in the country. From the perspective of this function, the core
reason for the existence of state immunity applies i.e., the public policy reason that the performance of
governmental function cannot be hindered or delayed by suits, nor can these suits control the use and
disposition of the means for the performance of governmental functions. In Providence Washington
Insurance Co. v. Republic of the Philippines,[31] we said:
[A] continued adherence to the doctrine of non-suability is not to be deplored for as
against the inconvenience that may be caused private parties, the loss of governmental
efficiency and the obstacle to the performance of its multifarious functions are far greater
if such a fundamental principle were abandoned and the availability of judicial remedy
were not thus restricted. With the well known propensity on the part of our people to go
 to court, at the least provocation, the loss of time and energy required to defend against
law suits, in the absence of such a basic principle that constitutes such an effective
obstacle, could very well be imagined.

PROVI argues that TESDA can be sued because it has effectively waived its immunity when it
entered into a contract with PROVI for a commercial purpose. According to PROVI, since the purpose of
its contract with TESDA is to provide identification PVC cards with security seal which TESDA will
thereafter sell to TESDA trainees, TESDA thereby engages in commercial transactions not incidental to
its governmental functions.

TESDAs response to this position is to point out that it is not engaged in business, and there is nothing in
the records to show that its purchase of the PVC cards from PROVI is for a business purpose. While
TESDA admits that it will charge the trainees with a fee for the PVC cards, it claims that this fee is only
to recover their costs and is not intended for profit.

We agree with TESDA. As the appellate court found, the PVC cards purchased by TESDA from
PROVI are meant to properly identify the trainees who passed TESDAs National Skills Certification
Program the program that immediately serves TESDAs mandated function of developing and establishing
a national system of skills standardization, testing, and certification in the country. [32] Aside from the
express mention of this function in R.A. No. 7796, the details of this function are provided under DOLE
Administrative Order No. 157, S. 1992, as supplemented by Department Order Nos. 3 thru 3-F, S. 1994
and Department Order No. 13, S. 1994.[33]

Admittedly, the certification and classification of trainees may be undertaken in ways other than
the issuance of identification cards, as the RTC stated in its assailed Order.[34] How the mandated
certification is to be done, however, lies within the discretion of TESDA as an incident of its mandated
function, and is a properly delegated authority that this Court cannot inquire into, unless its exercise is
attended by grave abuse of discretion.

That TESDA sells the PVC cards to its trainees for a fee does not characterize the transaction as
industrial or business; the sale, expressly authorized by the TESDA Act,[35] cannot be considered
separately from TESDAs general governmental functions, as they are undertaken in the discharge of these
functions. Along this line of reasoning, we held in Mobil Philippines v. Customs Arrastre Services:[36]

Now, the fact that a non-corporate government entity performs a function proprietary in
nature does not necessarily result in its being suable. If said non-governmental function is
undertaken as an incident to its governmental function, there is no waiver thereby of the
sovereign immunity from suit extended to such government entity.
TESDAs funds are public in character, hence
exempt from attachment or garnishment.

Even assuming that TESDA entered into a proprietary contract with PROVI and thereby gave its implied
consent to be sued, TESDAs funds are still public in nature and, thus, cannot be the valid subject of a writ
of garnishment or attachment. Under Section 33 of the TESDA Act, the TESDA budget for the
implementation of the Act shall be included in the annual General Appropriation Act; hence, TESDA
funds, being sourced from the Treasury, are moneys belonging to the government, or any of its
departments, in the hands of public officials.[37] We specifically spoke of the limits in dealing with this
fund in Republic v. Villasor[38] when we said:

This fundamental postulate underlying the 1935 Constitution is now made

explicit in the revised charter. It is therein expressly provided, The State may not be sued
without its consent. A corollary, both dictated by logic and sound sense, from such a
basic concept, is that public funds cannot be the object of garnishment proceedings
even if the consent to be sued had been previously granted and the state liability
adjudged. Thus in the recent case of Commissioner of Public Highways vs. San Diego,
such a well-settled doctrine was restated in the opinion of Justice Teehankee:

The universal rule that where the State gives its consent to be sued by
private parties either by general or special law, it may limit claimant's
action 'only up to the completion of proceedings anterior to the stage of
execution' and that the power of the Courts ends when the judgment is
rendered, since government funds and properties may not be seized
under writs of execution or garnishment to satisfy such judgments, is
based on obvious considerations of public policy. Disbursements of
public funds must be covered by the corresponding appropriation as
required by law. The functions and public services rendered by the
State cannot be allowed to be paralyzed or disrupted by the
diversion of public funds from their legitimate and specific objects,
as appropriated by law. [Emphasis supplied.]

We reiterated this doctrine in Traders Royal Bank v. Intermediate Appellate Court,[39] where we
said:

The NMPCs implied consent to be sued notwithstanding, the trial court did not
have the power to garnish NMPC deposits to answer for any eventual judgment against
it. Being public funds, the deposits are not within the reach of any garnishment or
attachment proceedings. [Emphasis supplied.]

As pointed out by TESDA in its Memorandum,[40] the garnished funds constitute TESDAs lifeblood in
government parlance, its MOOE[41]whose withholding via a writ of attachment, even on a temporary
basis, would paralyze TESDAs functions and services. As well, these funds also include TESDAs
Personal Services funds from which salaries of TESDA personnel are sourced. Again and for obvious
reasons, the release of these funds cannot be delayed.

PROVI has not shown that it is entitled to the

writ of attachment.

Even without the benefit of any immunity from suit, the attachment of TESDA funds should not
have been granted, as PROVI failed to prove that TESDA fraudulently misapplied or converted funds
allocated under the Certificate as to Availability of Funds. Section 1, Rule 57 of the Rules of Court sets
forth the grounds for issuance of a writ of preliminary attachment, as follows:

SECTION 1. Grounds upon which attachment may issue. A plaintiff or any proper party
may, at the commencement of the action or at any time thereafter, have the property of
the adverse party attached as security for the satisfaction of any judgment that may be
recovered in the following cases:

(a) In an action for recovery of a specified amount of money or damages, other than
moral and exemplary, on a cause of action arising from law, contract, quasi-contract,
delict or quasi-delict against a party who is about to depart from the Philippines with
intent to defraud his creditors;

(b) In an action for money or property embezzled or fraudulently misapplied or

converted to his use by a public officer, or an officer of a corporation, or an
attorney, factor, broker, agent or clerk, in the course of his employment as such, or
by any other person in a fiduciary capacity, or for a willful violation of duty;

(c) In an action to recover the possession of property unjustly or fraudulently taken,

detained or converted, when the property or any part thereof, has been concealed,
removed or disposed of to prevent its being found or taken by the applicant or an
authorized person;

(d) In an action against a party who has been guilty of fraud in contracting the debt
or incurring the obligation upon which the action is brought, or in concealing or
disposing of the property for the taking, detention or conversion of which the action
is brought;

(e) In an action against a party who has removed or disposed of his property, or is about
to do so, with intent to defraud his creditors;

(f) In an action against a party who does not reside and is not found in the Philippines, or
on whom summons may be served by publication. [Emphasis supplied.]
 Jurisprudence teaches us that the rule on the issuance of a writ of attachment must be construed
strictly in favor of the defendant. Attachment, a harsh remedy, must be issued only on concrete and
specific grounds and not on general averments merely quoting the words of the pertinent rules. [42] Thus,
the applicants affidavit must contain statements clearly showing that the ground relied upon for the
attachment exists.

Section 1(b), Rule 57 of the Rules of Court, that PROVI relied upon, applies only where money
or property has been embezzled or converted by a public officer, an officer of a corporation, or some
other person who took advantage of his fiduciary position or who willfully violated his duty.

PROVI, in this case, never entrusted any money or property to TESDA. While the Contract
Agreement is supported by a Certificate as to Availability of Funds (Certificate) issued by the Chief of
TESDAs Accounting Division, this Certificate does not automatically confer ownership over the funds to
PROVI. Absent any actual disbursement, these funds form part of TESDAs public funds, and TESDAs
failure to pay PROVI the amount stated in the Certificate cannot be construed as an act of fraudulent
misapplication or embezzlement. In this regard, Section 86 of Presidential Decree No. 1445 (The
Accounting Code) provides:

Section 86. Certificate showing appropriation to meet contract. Except in a case of a

contract for personal service, for supplies for current consumption or to be carried in
stock not exceeding the estimated consumption for three months, or banking transactions
of government-owned or controlled banks, no contract involving the expenditure of
public funds by any government agency shall be entered into or authorized unless the
proper accounting official or the agency concerned shall have certified to the officer
entering into the obligation that funds have been duly appropriated for the purpose and
that the amount necessary to cover the proposed contract for the current fiscal year is
available for expenditure on account thereof, subject to verification by the auditor
concerned. The certification signed by the proper accounting official and the auditor who
verified it, shall be attached to and become an integral part of the proposed contract,
and the sum so certified shall not thereafter be available for expenditure for any
other purpose until the obligation of the government agency concerned under the
contract is fully extinguished. [Emphasis supplied.]

By law, therefore, the amount stated in the Certification should be intact and remains devoted to its
purpose since its original appropriation.PROVI can rebut the presumption that necessarily arises from the
cited provision only by evidence to the contrary. No such evidence has been adduced.
 Section 1 (d), Rule 57 of the Rules of Court applies where a party is guilty of fraud in
contracting a debt or incurring an obligation, or in concealing or disposing of the property for the taking,
detention or conversion of which the action is brought. In Wee v. Tankiansee,[43] we held that for a writ of
attachment to issue under this Rule, the applicant must sufficiently show the factual circumstances of the
alleged fraud because fraudulent intent cannot be inferred from the debtors mere non-payment of the debt
or failure to comply with his obligation. The affidavit, being the foundation of the writ, must contain
particulars showing how the imputed fraud was committed for the court to decide whether or not to issue
the writ. To reiterate, a writ of attachment can only be granted on concrete and specific grounds and not
on general averments merely quoting the words of the rules.[44]

The affidavit filed by PROVI through Elmer Ramiro, its President and Chief Executive Officer,
only contained a general allegation that TESDA had fraudulent misapplied or converted the amount
of P10,975,000.00 that was allotted to it. Clearly, we cannot infer any finding of fraud from PROVIs
vague assertion, and the CA correctly ruled that the lower court acted with grave abuse of discretion in
granting the writ of attachment despite want of any valid ground for its issuance.

For all these reasons, we support the appellate courts conclusion that no valid ground exists to
support the grant of the writ of attachment against TESDA. The CAs annulment and setting aside of the
Orders of the RTC were therefore fully in order.

WHEREFORE, premises considered, we hereby DENY the petition filed by petitioner Professional
Video, Inc., and AFFIRM the Court of Appeals Decision dated July 23, 2002, and Resolution
of September 27, 2002, in CA-G.R. SP No. 67599. Costs against the petitioner.

SO ORDERED.
 SECOND DIVISION

CENTURY CANNING CORPORATION, G.R. No. 152894

Petitioner,
Present:

QUISUMBING, J.,
Chairperson,
CARPIO,
CARPIO MORALES,
- versus - TINGA, and
VELASCO, JR., JJ.

COURT OF APPEALS and

GLORIA C. PALAD, Promulgated:
Respondents.
August 17, 2007

x--------------------------------------------------x

DECISION

CARPIO, J.:

The Case

This is a petition for review[1] of the Decision[2] dated 12 November 2001 and the Resolution dated 5
April 2002 of the Court of Appeals in CA-G.R. SP No. 60379.

The Facts
On 15 July 1997, Century Canning Corporation (petitioner) hired Gloria C. Palad (Palad) as fish cleaner
at petitioners tuna and sardines factory. Palad signed on 17 July 1997 an apprenticeship agreement [3] with
petitioner. Palad received an apprentice allowance of P138.75 daily. On 25 July 1997, petitioner
submitted its apprenticeship program for approval to the Technical Education and Skills Development
Authority (TESDA) of the Department of Labor and Employment (DOLE). On 26 September 1997, the
TESDA approved petitioners apprenticeship program.[4]

According to petitioner, a performance evaluation was conducted on 15 November 1997, where petitioner
gave Palad a rating of N.I. or needs improvement since she scored only 27.75% based on a 100%
performance indicator. Furthermore, according to the performance evaluation, Palad incurred numerous
tardiness and absences. As a consequence, petitioner issued a termination notice[5] dated 22 November
1997 to Palad, informing her of her termination effective at the close of business hours of 28 November
1997.

Palad then filed a complaint for illegal dismissal, underpayment of wages, and non-payment of pro-rated
13th month pay for the year 1997.

On 25 February 1999, the Labor Arbiter dismissed the complaint for lack of merit but ordered petitioner
to pay Palad her last salary and her pro-rated 13th month pay. The dispositive portion of the Labor
Arbiters decision reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring that the

complaint for illegal dismissal filed by the complainant against the respondents in the
above-entitled case should be, as it is hereby DISMISSED for lack of merit. However, the
respondents are hereby ordered to pay the complainant the amount of ONE THOUSAND
SIX HUNDRED THIRTY-TWO PESOS (P1,632.00), representing her last salary and the
amount of SEVEN THOUSAND TWO HUNDRED TWENTY EIGHT (P7,228.00)
PESOS representing her prorated 13th month pay.

All other issues are likewise dismissed.

SO ORDERED.[6]

On appeal, the National Labor Relations Commission (NLRC) affirmed with modification the Labor
Arbiters decision, thus:

WHEREFORE, premises considered, the decision of the Arbiter dated 25 February 1999
is hereby MODIFIED in that, in addition, respondents are ordered to pay complainants
backwages for two (2) months in the amount of P7,176.00 (P138.75 x 26 x 2 mos.). All
other dispositions of the Arbiter as appearing in the dispositive portion of his decision are
AFFIRMED.

SO ORDERED.[7]

Upon denial of Palads motion for reconsideration, Palad filed a special civil action for certiorari with the
Court of Appeals. On 12 November 2001, the Court of Appeals rendered a decision, the dispositive
portion of which reads:
 WHEREFORE, in view of the foregoing, the questioned decision of the NLRC is hereby
SET ASIDE and a new one entered, to wit:

(a) finding the dismissal of petitioner to be illegal;

(b) ordering private respondent to pay petitioner her underpayment in wages;
(c) ordering private respondent to reinstate petitioner to her former position
without loss of seniority rights and to pay her full backwages computed from the
time compensation was withheld from her up to the time of her reinstatement;
(d) ordering private respondent to pay petitioner attorneys fees equivalent to ten
(10%) per cent of the monetary award herein; and
(e) ordering private respondent to pay the costs of the suit.

SO ORDERED.[8]

The Ruling of the Court of Appeals

The Court of Appeals held that the apprenticeship agreement which Palad signed was not valid and
binding because it was executed more than two months before the TESDA approved petitioners
apprenticeship program. The Court of Appeals cited Nitto Enterprises v. National Labor Relations
Commission,[9] where it was held that prior approval by the DOLE of the proposed apprenticeship
program is a condition sine qua nonbefore an apprenticeship agreement can be validly entered into.

The Court of Appeals also held that petitioner illegally dismissed Palad. The Court of Appeals ruled that
petitioner failed to show that Palad was properly apprised of the required standard of performance. The
Court of Appeals likewise held that Palad was not afforded due process becausepetitioner did not comply
with the twin requirements of notice and hearing.

The Issues
Petitioner raises the following issues:

1. WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE

ERROR IN HOLDING THAT PRIVATE RESPONDENT WAS NOT AN
APPRENTICE; and

2. WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE

ERROR IN HOLDING THAT PETITIONER HAD NOT ADEQUATELY
PROVEN THE EXISTENCE OF A VALID CAUSE IN TERMINATING THE
SERVICE OF PRIVATE RESPONDENT.[10]
 The Ruling of the Court

The petition is without merit.

Registration and Approval by the TESDA of Apprenticeship Program Required Before Hiring of
Apprentices

The Labor Code defines an apprentice as a worker who is covered by a written apprenticeship agreement
with an employer.[11] One of the objectives of Title II (Training and Employment of Special Workers) of
the Labor Code is to establish apprenticeship standards for the protection of apprentices. [12] In line with
this objective, Articles 60 and 61 of the Labor Code provide:

ART. 60. Employment of apprentices. Only employers in the highly technical

industries may employ apprentices and only in apprenticeable occupations
approved by the Minister of Labor and Employment. (Emphasis supplied)

ART. 61. Contents of apprenticeship agreements. Apprenticeship agreements, including

the wage rates of apprentices, shall conform to the rules issued by the Minister of Labor
and Employment. The period of apprenticeship shall not exceed six
months. Apprenticeship agreements providing for wage rates below the legal
minimum wage, which in no case shall start below 75 percent of the applicable
minimum wage, may be entered into only in accordance with apprenticeship
programs duly approved by the Minister of Labor and Employment. The Ministry
shall develop standard model programs of apprenticeship. (Emphasis supplied)

In Nitto Enterprises v. National Labor Relations Commission,[13] the Court cited Article 61 of the Labor
Code and held that an apprenticeship program should first be approved by the DOLE before an apprentice
may be hired, otherwise the person hired will be considered a regular employee. The Court held:
In the case at bench, the apprenticeship agreement between petitioner and private
respondent was executed on May 28, 1990 allegedly employing the latter as an apprentice
in the trade of care maker/molder. On the same date, an apprenticeship program was
prepared by petitioner and submitted to the Department of Labor and Employment.
However, the apprenticeship agreement was filed only on June 7, 1990. Notwithstanding
the absence of approval by the Department of Labor and Employment, the apprenticeship
agreement was enforced the day it was signed.
Based on the evidence before us, petitioner did not comply with the requirements of the
law. It is mandated that apprenticeship agreements entered into by the employer
 and apprentice shall be entered only in accordance with the apprenticeship program
duly approved by the Minister of Labor and Employment.
Prior approval by the Department of Labor and Employment of the proposed
apprenticeship program is, therefore, a condition sine qua non before an
apprenticeship agreement can be validly entered into.
The act of filing the proposed apprenticeship program with the Department of Labor and
Employment is a preliminary step towards its final approval and does not instantaneously
give rise to an employer-apprentice relationship.
Article 57 of the Labor Code provides that the State aims to establish a national
apprenticeship program through the participation of employers, workers and government
and non-government agencies and to establish apprenticeship standards for the protection
of apprentices. To translate such objectives into existence, prior approval of the DOLE to
any apprenticeship program has to be secured as a condition sine qua non before any
such apprenticeship agreement can be fully enforced. The role of the DOLE in
apprenticeship programs and agreements cannot be debased.
Hence, since the apprenticeship agreement between petitioner and private respondent has
no force and effect in the absence of a valid apprenticeship program duly approved by the
DOLE, private respondents assertion that he was hired not as an apprentice but as a
delivery boy (kargador or pahinante) deserves credence. He should rightly be considered
as a regular employee of petitioner as defined by Article 280 of the Labor Code x x x.
(Emphasis supplied)[14]

Republic Act No. 7796[15] (RA 7796), which created the TESDA, has transferred the authority over
apprenticeship programs from the Bureau of Local Employment of the DOLE to the TESDA. [16] RA 7796
emphasizes TESDAs approval of the apprenticeship program as a pre-requisite for the hiring of
apprentices. Such intent is clear under Section 4 of RA 7796:
SEC. 4. Definition of Terms. As used in this Act:

xxx

j) Apprenticeship training within employment with compulsory related theoretical

instructions involving a contract between an apprentice and an employer on an
approved apprenticeable occupation;

k) Apprentice is a person undergoing training for an approved apprenticeable

occupation during an established period assured by an apprenticeship agreement;

l) Apprentice Agreement is a contract wherein a prospective employer binds himself to

train the apprentice who in turn accepts the terms of training for a recognized
apprenticeable occupation emphasizing the rights, duties and responsibilities of
each party;
 m) Apprenticeable Occupation is an occupation officially endorsed by a tripartite body
and approved for apprenticeship by the Authority [TESDA]; (Emphasis supplied)

In this case, the apprenticeship agreement was entered into between the parties before petitioner filed its
apprenticeship program with the TESDA for approval. Petitioner and Palad executed the apprenticeship
agreement on 17 July 1997 wherein it was stated that the training would start on 17 July 1997 and would
end approximately in December 1997.[17] On 25 July 1997, petitioner submitted for approval its
apprenticeship program, which the TESDA subsequently approved on 26 September 1997.[18] Clearly, the
apprenticeship agreement was enforced even before the TESDA approved petitioners apprenticeship
program. Thus, the apprenticeship agreement is void because it lacked prior approval from the TESDA.

The TESDAs approval of the employers apprenticeship program is required before the employer is
allowed to hire apprentices. Prior approval from the TESDA is necessary to ensure that only employers in
the highly technical industries may employ apprentices and only in apprenticeable occupations.[19] Thus,
under RA 7796, employers can only hire apprentices for apprenticeable occupations which must be
officially endorsed by a tripartite body and approved for apprenticeship by the TESDA. This is to ensure
the protection of apprentices and to obviate possible abuses by prospective employers who may want to
take advantage of the lower wage rates for apprentices and circumvent the right of the employees to be
secure in their employment.

The requisite TESDA approval of the apprenticeship program prior to the hiring of apprentices was
further emphasized by the DOLE with the issuance of Department Order No. 68-04 on 18 August
2004. Department Order No. 68-04, which provides the guidelines in the implementation of the
Apprenticeship and Employment Program of the government, specifically states that no enterprise shall
be allowed to hire apprentices unless its apprenticeship program is registered and approved by
TESDA.[20]

Since Palad is not considered an apprentice because the apprenticeship agreement was enforced before
the TESDAs approval of petitioners apprenticeship program, Palad is deemed a regular employee
performing the job of a fish cleaner. Clearly, the job of a fish cleaner is necessary in petitioners business
as a tuna and sardines factory. Under Article 280[21] of the Labor Code, an employment is deemed regular
where the employee has been engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer.
 Illegal Termination of Palad

We shall now resolve whether petitioner illegally dismissed Palad.

Under Article 279[22] of the Labor Code, an employer may terminate the services of an employee for just
causes[23] or for authorized causes.[24] Furthermore, under Article 277(b)[25] of the Labor Code, the
employer must send the employee who is about to be terminated, a written notice stating the causes for
termination and must give the employee the opportunity to be heard and to defend himself. Thus, to
constitute valid dismissal from employment, two requisites must concur: (1) the dismissal must be for a
just or authorized cause; and (2) the employee must be afforded an opportunity to be heard and to defend
himself.[26]

In this case, the Labor Arbiter held that petitioner terminated Palad for habitual absenteeism and poor
efficiency of performance. Under Section 25, Rule VI, Book II of the Implementing Rules of the Labor
Code, habitual absenteeism and poor efficiency of performance are among the valid causes for which the
employer may terminate the apprenticeship agreement after the probationary period.

However, the NLRC reversed the finding of the Labor Arbiter on the issue of the legality of Palads
termination:

As to the validity of complainants dismissal in her status as an apprentice, suffice to state

that the findings of the Arbiter that complainant was dismissed due to failure to meet the
standards is nebulous. What clearly appears is that complainant already passed the
probationary status of the apprenticeship agreement of 200 hours at the time she was
terminated on 28 November 1997 which was already the fourth month of the
apprenticeship period of 1000 hours. As such, under the Code, she can only be dismissed
for cause, in this case, for poor efficiency of performance on the job or in the classroom
for a prolonged period despite warnings duly given to the apprentice.

We noted that no clear and sufficient evidence exist to warrant her dismissal as an
apprentice during the agreed period. Besides the absence of any written warnings
given to complainant reminding her of poor performance, respondents evidence in
this respect consisted of an indecipherable or unauthenticated xerox of the
performance evaluation allegedly conducted on complainant. This is of doubtful
authenticity and/or credibility, being not only incomplete in the sense that appearing
thereon is a signature (not that of complainant) side by side with a date indicated
as 1/16/98. From the looks of it, this signature is close to and appertains to the
typewritten position of Division/Department Head, which is below the signature of
complainants immediate superior who made the evaluation indicated as 11-15-97.

The only conclusion We can infer is that this evaluation was made belatedly,
specifically, after the filing of the case and during the progress thereof in the
 Arbitral level, as shown that nothing thereon indicate that complainant was
notified of the results. Its authenticity therefor, is a big question mark, and hence
lacks any credibility. Evidence, to be admissible in administrative proceedings, must
at least have a modicum of authenticity. This, respondents failed to comply with. As
such, complainant is entitled to the payment of her wages for the remaining two (2)
months of her apprenticeship agreement.[27] (Emphasis supplied)

Indeed, it appears that the Labor Arbiters conclusion that petitioner validly terminated Palad was based
mainly on the performance evaluation allegedly conducted by petitioner. However, Palad alleges that she
had no knowledge of the performance evaluation conducted and that she was not even informed of the
result of the alleged performance evaluation. Palad also claims she did not receive a notice of dismissal,
nor was she given the chance to explain. According to petitioner, Palad did not receive the termination
notice because Palad allegedly stopped reporting for work after being informed of the result of the
evaluation.

Under Article 227 of the Labor Code, the employer has the burden of proving that the termination was for
a valid or authorized cause.[28]Petitioner failed to substantiate its claim that Palad was terminated for valid
reasons. In fact, the NLRC found that petitioner failed to prove the authenticity of the performance
evaluation which petitioner claims to have conducted on Palad, where Palad received a performance
rating of only 27.75%. Petitioner merely relies on the performance evaluation to prove Palads
inefficiency. It was likewise not shown that petitioner ever apprised Palad of the performance standards
set by the company. When the alleged valid cause for the termination of employment is not clearly
proven, as in this case, the law considers the matter a case of illegal dismissal.[29]

Furthermore, Palad was not accorded due process. Even if petitioner did conduct a performance
evaluation on Palad, petitioner failed to warn Palad of her alleged poor performance. In fact, Palad denies
any knowledge of the performance evaluation conducted and of the result thereof.Petitioner likewise
admits that Palad did not receive the notice of termination[30] because Palad allegedly stopped reporting
for work. The records are bereft of evidence to show that petitioner ever gave Palad the opportunity to
explain and defend herself. Clearly, the two requisites for a valid dismissal are lacking in this case.

WHEREFORE, we AFFIRM the Decision dated 12 November 2001 and the Resolution dated 5 April
2002 of the Court of Appeals in CA-G.R. SP No. 60379.
SO ORDERED.
 Republic of the Philippines
Supreme Court
Manila

THIRD DIVISION

ATLANTA INDUSTRIES, INC. G.R. No. 187320

and/or ROBERT CHAN,
Petitioners,
Present:

CARPIO MORALES, J., Chairperson,

BRION,
BERSAMIN,
- versus - VILLARAMA, JR., and
SERENO, JJ.

Promulgated:

APRILITO R. SEBOLINO,
KHIM V. COSTALES, January 26, 2011
ALVIN V. ALMOITE, and
JOSEPH S. SAGUN,
Respondents.
x----------------------------------------------------------------------------------------x

DECISION

BRION, J.:

For resolution is the petition for review on certiorari[1] assailing the decision[2] and the resolution[3] of the
Court of Appeals (CA) rendered on November 4, 2008 and March 25, 2009, respectively, in CA-G.R. SP.
No. 99340.[4]

The Antecedents

The facts are summarized below.

In the months of February and March 2005, complainants Aprilito R. Sebolino, Khim V. Costales, Alvin
V. Almoite, Joseph S. Sagun, Agosto D. Zao, Domingo S. Alegria, Jr., Ronie Ramos, Edgar Villagomez,
Melvin Pedregoza, Teofanes B. Chiong, Jr., Leonardo L. dela Cruz, Arnold A. Magalang, and Saturnino
M. Mabanag filed several complaints for illegal dismissal, regularization, underpayment, nonpayment of
wages and other money claims, as well as claims for moral and exemplary damages and attorneys fees
against the petitioners Atlanta Industries, Inc. (Atlanta) and its President and Chief Operating Officer
Robert Chan. Atlanta is a domestic corporation engaged in the manufacture of steel pipes.
The complaints were consolidated and were raffled to Labor Arbiter Daniel Cajilig, but were later
transferred to Labor Arbiter Dominador B. Medroso, Jr.

The complainants alleged that they had attained regular status as they were allowed to work
with Atlanta for more than six (6) months from the start of a purported apprenticeship agreement between
them and the company. They claimed that they were illegally dismissed when the apprenticeship
agreement expired.

In defense, Atlanta and Chan argued that the workers were not entitled to regularization and to their
money claims because they were engaged as apprentices under a government-approved apprenticeship
program. The company offered to hire them as regular employees in the event vacancies for regular
positions occur in the section of the plant where they had trained. They also claimed that their names did
not appear in the list of employees (Master List)[5] prior to their engagement as apprentices.
On May 24, 2005, dela Cruz, Magalang, Zao and Chiong executed a Pagtalikod at Pagwawalang
Saysay before Labor Arbiter Cajilig.

The Compulsory Arbitration Rulings

On April 24, 2006, Labor Arbiter Medroso dismissed the complaint with respect to dela Cruz, Magalang,
Zao and Chiong, but found the termination of service of the remaining nine to be illegal. [6] Consequently,
the arbiter awarded the dismissed workers backwages, wage differentials, holiday pay and service
incentive leave pay amounting to P1,389,044.57 in the aggregate.

Atlanta appealed to the National Labor Relations Commission (NLRC). In the meantime, or on October
10, 2006, Ramos, Alegria, Villagomez, Costales and Almoite allegedly entered into a compromise
agreement with Atlanta.[7] The agreement provided that except for Ramos, Atlantaagreed to pay the
workers a specified amount as settlement, and to acknowledge them at the same time as regular
employees.

On December 29, 2006,[8] the NLRC rendered a decision, on appeal, modifying the ruling of the labor
arbiter, as follows: (1) withdrawing the illegal dismissal finding with respect to Sagun, Mabanag,
Sebolino and Pedregoza; (2) affirming the dismissal of the complaints of dela Cruz, Zao, Magalang and
Chiong; (3) approving the compromise agreement entered into by Costales, Ramos, Villagomez, Almoite
and Alegria, and (4) denying all other claims.

Sebolino, Costales, Almoite and Sagun moved for the reconsideration of the decision, but the NLRC
denied the motion in its March 30, 2007[9]resolution. The four then sought relief from the CA through a
petition for certiorari under Rule 65 of the Rules of Court. They charged that the NLRC committed grave
abuse of discretion in: (1) failing to recognize their prior employment with Atlanta; (2) declaring the
second apprenticeship agreement valid; (3) holding that the dismissal of Sagun, Mabanag, Sebolino and
Melvin Pedregoza is legal; and (4) upholding the compromise agreement involving Costales, Ramos,
Villagomez, Almoite and Alegria.

The CA Decision

The CA granted the petition based on the following findings:[10]

1. The respondents were already employees of the company before they entered into the
first and second apprenticeship agreements Almoite and Costales were employed as early as December
2003 and, subsequently, entered into a first apprenticeship agreement from May 13, 2004 to October 12,
2004; before this first agreement expired, a second apprenticeship agreement, from October 9, 2004 to
March 8, 2005 was executed. The same is true with Sebolino and Sagun, who were employed
by Atlanta as early as March 3, 2004. Sebolino entered into his first apprenticeship agreement with the
company from March 20, 2004 to August 19, 2004, and his second apprenticeship agreement
from August 20, 2004 to January 19, 2005. Sagun, on the other hand, entered into his first agreement
from May 28, 2004 to October 8, 2004, and the second agreement from October 9, 2004 to March 8,
2005.

2. The first and second apprenticeship agreements were defective as they were executed
in violation of the law and the rules.[11] The agreements did not indicate the trade or occupation in which
the apprentice would be trained; neither was the apprenticeship program approved by the Technical
Education and Skills Development Authority (TESDA).
3. The positions occupied by the respondents machine operator, extruder operator and
scaleman are usually necessary and desirable in the manufacture of plastic building materials, the
companys main business. Costales, Almoite, Sebolino and Sagun were, therefore, regular employees
whose dismissals were illegal for lack of a just or authorized cause and notice.
4. The compromise agreement entered into by Costales and Almoite, together with
Ramos, Villagomez and Alegria, was not binding on Costales and Almoite because they did not sign the
agreement.

The petitioners themselves admitted that Costales and Almoite were initially planned to be a part
of the compromise agreement, but their employment has been regularized as early as January 11, 2006;
hence, the company did not pursue their inclusion in the compromise agreement.[12]

The CA faulted the NLRC for failing to appreciate the evidence regarding the respondents prior
employment with Atlanta. The NLRC recognized the prior employment of Costales and Almoite
on Atlantas monthly report for December 2003 for the CPS Department/Section dated January 6,
2004.[13] This record shows that Costales and Almoite were assigned to the companys first shift from 7:00
a.m. to 3:00 p.m. The NLRC ignored Sebolino and Saguns prior employment under the companys
Production and Work Schedule for March 7 to 12, 2005 dated March 3, 2004,[14] as they had been
Atlantas employees as early as March 3, 2004, with Sebolino scheduled to work on March 7-12, 2005 at
7:00 a.m. to 7:00 p.m., while Sagun was scheduled to work for the same period but from 7:00 p.m. to 7:00
a.m. The CA noted that Atlanta failed to challenge the authenticity of the two documents before it and the
labor authorities.

Atlanta and Chan moved for reconsideration, but the CA denied the motion in a resolution
rendered on March 25, 2009.[15] Hence, the present petition.

The Petition

Atlanta seeks a reversal of the CA decision, contending that the appellate court erred in (1)
concluding that Costales, Almoite, Sebolino and Sagun were employed by Atlanta before they were
engaged as apprentices; (2) ruling that a second apprenticeship agreement is invalid; (3) declaring that the
respondents were illegally dismissed; and (4) disregarding the compromise agreement executed by
Costales and Almoite. It submits the following arguments:

First. The CAs conclusion that the respondent workers were company employees before they
were engaged as apprentices was primarily based on the Monthly Report[16] and the Production and Work
Schedule for March 7-12, 2005,[17] in total disregard of the Master List[18]prepared by the company
accountant, Emelita M. Bernardo. The names of Costales, Almoite, Sebolino and Sagun do not appear as
employees in the Master List which contained the names of all the persons who were employed by and at
petitioner.[19]

Atlanta faults the CA for relying on the Production and Work Schedule and the Monthly Report
which were not sworn to, and in disregarding the Master List whose veracity was sworn to by Bernardo
and by Alex Go who headed the companys accounting division. It maintains that the CA should have
given more credence to the Master List.

Second. In declaring invalid the apprenticeship agreements it entered into with the respondent
workers, the CA failed to recognize the rationale behind the law on apprenticeship. It submits that under
the law,[20] apprenticeship agreements are valid, provided they do not exceed six (6) months and the
apprentices are paid the appropriate wages of at least 75% of the applicable minimum wage.

The respondents initially executed a five-month apprenticeship program with Atlanta, at the end
of which, they voluntarily and willingly entered into another apprenticeship agreement with the petitioner
for the training of a second skill[21] for five months; thus, the petitioners committed no violation of the
apprenticeship period laid down by the law.

Further, the apprenticeship agreements, entered into by the parties, complied with the requisites
under Article 62 of the Labor Code; the companys authorized representative and the respondents signed
the agreements and these were ratified by the companys apprenticeship committee. The apprenticeship
program itself was approved and certified by the TESDA.[22] The CA, thus, erred in overturning the
NLRCs finding that the apprenticeship agreements were valid.

Third. There was no illegal dismissal as the respondent workers tenure ended with the expiration
of the apprenticeship agreement they entered into. There was, therefore, no regular employer-employee
relationship between Atlanta and the respondent workers.

The Case for Costales, Almoite, Sebolino and Sagun

In a Comment filed on August 6, 2009,[23] Costales, Almoite, Sebolino and Sagun pray for a
denial of the petition for being procedurally defective and for lack of merit.

The respondent workers contend that the petition failed to comply with Section 4, Rule 45 of the
Rules of Court which requires that the petition be accompanied by supporting material portions of the
records. The petitioners failed to attach to the petition a copy of the Production and Work Schedule
despite their submission that the CA relied heavily on the document in finding the respondent workers
prior employment with Atlanta. They also did not attach a copy of the compromise agreement purportedly
executed by Costales and Almoite. For this reason, the respondent workers submit that the petition should
be dismissed.

The respondents posit that the CA committed no error in holding that they were already Atlantas
employees before they were engaged as apprentices, as confirmed by the companys Production and Work
Schedule.[24] They maintain that the Production and Work Schedule meets the requirement of substantial
evidence as the petitioners failed to question its authenticity. They point out that the schedule was
prepared by Rose A. Quirit and approved by Adolfo R. Lope, head of the companys PE/Spiral Section.
They argue that it was highly unlikely that the head of a production section of the company would prepare
and assign work to the complainants if the latter had not been company employees.

The respondent workers reiterate their mistrust of the Master List [25] as evidence that they were not
employees of the company at the time they became apprentices. They label the Master List as self-
serving, dubious and even if considered as authentic, its content contradicts a lot of petitioners claim and
allegations,[26] thus -

1. Aside from the fact that the Master List is not legible, it contains only the names of
inactive employees. Even those found by the NLRC to have been employed in the company (such as
Almoite, Costales and Sagun) do not appear in the list. If Costales and Almoite had been employed with
Atlanta since January 11, 2006, as the company claimed,[27] their names would have been in the list,
considering that the Master List accounts for all employees as of May 2006 the notation carried on top of
each page of the document.
 2. There were no entries of employees hired or resigned in the years 2005 and 2006
despite the as of May 2006 notation; several pages making up the Master List contain names of
employees for the years 1999 - 2004.
3. The fact that Atlanta presented the purported Master List instead of the payroll raised
serious doubts on the authenticity of the list.

In sum, the respondent workers posit that the presentation of the Master List revealed the
intention of the herein petitioner[s] to perpetually hide the fact of [their] prior employment.[28]

On the supposed apprenticeship agreements they entered into, Costales, Almoite, Sebolino and
Sagun refuse to accept the agreements validity, contending that the companys apprenticeship program is
merely a ploy to continually deprive [them] of their rightful wages and benefits which are due them as
regular employees.[29] They submit the following indubitable facts and ratiocinations:[30]

1. The apprenticeship agreements were submitted to TESDA only in 2005 (with dates
of receipt on 1/4/05 & 2/22/05[31]), when the agreements were supposed to have been executed in April or
May 2004. Thus, the submission was made long after the starting date of the workers apprenticeship or
even beyond the agreements completion/termination date, in violation of Section 23, Rule VI, Book II of
the Labor Code.
2. The respondent workers were made to undergo apprenticeship for occupations
different from those allegedly approved by TESDA. TESDA approved Atlantas apprenticeship program
on Plastic Molder[32] and not for extrusion molding process, engineering, pelletizing process and mixing
process.
3. The respondents were already skilled workers prior to the apprenticeship program as
they had been employed and made to work in the different job positions where they had undergone
training. Sagun and Sebolino, together with Mabanag, Pedregoza, dela Cruz, Chiong, Magalang and
Alegria were even given production assignments and work schedule at the PE/Spiral Section from May
11, 2004 to March 23, 2005, and some of them were even assigned to the 3:00 p.m. 11:00 p.m. and
graveyard shifts (11:00 p.m. 7:00 a.m.) during the period.[33]
4. The respondent workers were required to continue as apprentices beyond six months.
The TESDA certificate of completion indicates that the workers apprenticeship had been completed after
six months. Yet, they were suffered to work as apprentices beyond that period.

Costales, Almoite, Sebolino and Sagun resolutely maintain that they were illegally dismissed, as
the reason for the termination of their employment notice of the completion of the second apprenticeship
agreement did not constitute either a just or authorized cause under Articles 282 and 283 of the Labor
Code.

Finally, Costales and Almoite refuse to be bound by the compromise

agreement[34] that Atlanta presented to defeat the two workers cause of action. They claim that the
supposed agreement is invalid as against them, principally because they did not sign it.
 The Courts Ruling

The procedural issue

The respondent workers ask that the petition be dismissed outright for the petitioners failure to attach to
the petition a copy of the Production and Work Schedule and a copy of the compromise agreement
Costales and Almoite allegedly entered into material portions of the record that should accompany and
support the petition, pursuant to Section 4, Rule 45 of the Rules of Court.

In Mariners Polytechnic Colleges Foundation, Inc. v. Arturo J. Garchitorena[35] where the Court
addressed essentially the same issue arising from Section 2(d), Rule 42 of the Rules of Court, [36] we held
that the phrase of the pleadings and other material portions of the record xxx as would support the
allegation of the petition clearly contemplates the exercise of discretion on the part of the petitioner in the
selection of documents that are deemed to be relevant to the petition. The crucial issue to consider then is
whether or not the documents accompanying the petition sufficiently supported the allegations therein.[37]

As in Mariners, we find that the documents attached to the petition sufficiently support the petitioners
allegations. The accompanying CA decision[38] and resolution,[39] as well as those of the labor
arbiter[40] and the NLRC,[41] referred to the parties position papers and even to their replies and rejoinders.
Significantly, the CA decision narrates the factual antecedents, defines the complainants cause of action,
and cites the arguments, including the evidence the parties adduced. If any, the defect in the petition lies
in the petitioners failure to provide legible copies of some of the material documents mentioned,
especially several pages in the decisions of the labor arbiter and of the NLRC. This defect, however, is
not fatal as the challenged CA decision clearly summarized the labor tribunals rulings. We, thus, find no
procedural obstacle in resolving the petition on the merits.

The merits of the case

We find no merit in the petition. The CA committed no reversible error in nullifying the NLRC
decision[42] and in affirming the labor arbiters ruling,[43] as it applies to Costales, Almoite, Sebolino and
Sagun. Specifically, the CA correctly ruled that the four were illegally dismissed because (1) they were
already employees when they were required to undergo apprenticeship and (2) apprenticeship agreements
were invalid.

The following considerations support the CA ruling.

First. Based on company operations at the time material to the case, Costales, Almoite, Sebolino and
Sagun were already rendering service to the company as employees before they were made to undergo
apprenticeship. The company itself recognized the respondents status through relevant operational records
in the case of Costales and Almoite, the CPS monthly report for December 2003 [44] which the NLRC
relied upon and, for Sebolino and Sagun, the production and work schedule for March 7 to 12,
2005[45] cited by the CA.

Under the CPS monthly report, Atlanta assigned Costales and Almoite to the first shift (7:00 a.m. to 3:00
p.m.) of the Sections work. The Production and Work Schedules, in addition to the one noted by the CA,
showed that Sebolino and Sagun were scheduled on different shifts vis--vis the production and work of
the companys PE/Spiral Section for the periods July 5-10, 2004;[46] October 25-31, 2004;[47] November 8-
14, 2004;[48] November 16-22, 2004;[49] January 3-9, 2005;[50] January 10-15, 2005;[51] March 7-12,
2005[52] and March 17-23, 2005.[53]

We stress that the CA correctly recognized the authenticity of the operational documents, for the failure
of Atlanta to raise a challenge against these documents before the labor arbiter, the NLRC and the CA
itself. The appellate court, thus, found the said documents sufficient to establish the employment of the
respondents before their engagement as apprentices.

Second. The Master List[54] (of employees) that the petitioners heavily rely upon as proof of their position
that the respondents were not Atlantas employees, at the time they were engaged as apprentices, is
unreliable and does not inspire belief.

The list, consisting of several pages, is hardly legible. It requires extreme effort to sort out the names of
the employees listed, as well as the other data contained in the list. For this reason alone, the list deserves
little or no consideration. As the respondents also pointed out, the list itself contradicts a lot of Atlantas
claims and allegations, thus: it lists only the names of inactive employees; even the names of those the
NLRC found to have been employed by Atlanta, like Costales and Almoite, and those who even Atlanta
claims attained regular status on January 11, 2006,[55]do not appear in the list when it was supposed to
account for all employees as of May 6, 2006. Despite the May 6, 2006 cut off date, the list contains no
entries of employees who were hired or who resigned in 2005 and 2006. We note that the list contains the
names of employees from 1999 to 2004.

We cannot fault the CA for ignoring the Master List even if Bernardo, its head office accountant, swore to
its correctness and authenticity.[56] Its substantive unreliability gives it very minimal probative
value. Atlanta would have been better served, in terms of reliable evidence, if true copies of the payroll
(on which the list was based, among others, as Bernardo claimed in her affidavit) were presented instead.

Third. The fact that Costales, Almoite, Sebolino and Sagun were already rendering service to the
company when they were made to undergo apprenticeship (as established by the evidence) renders the
apprenticeship agreements irrelevant as far as the four are concerned. This reality is highlighted by the
CA finding that the respondents occupied positions such as machine operator, scaleman and extruder
operator - tasks that are usually necessary and desirable in Atlantas usual business or trade as
manufacturer of plastic building materials.[57] These tasks and their nature characterized the four as
regular employees under Article 280 of the Labor Code. Thus, when they were dismissed without just or
authorized cause, without notice, and without the opportunity to be heard, their dismissal was illegal
under the law.[58]

Even if we recognize the companys need to train its employees through apprenticeship, we can only
consider the first apprenticeship agreement for the purpose. With the expiration of the first agreement and
the retention of the employees, Atlanta had, to all intents and purposes, recognized the completion of their
training and their acquisition of a regular employee status. To foist upon them the second apprenticeship
agreement for a second skill which was not even mentioned in the agreement itself,[59] is a violation of the
Labor Codes implementing rules[60] and is an act manifestly unfair to the employees, to say the least. This
we cannot allow.

Fourth. The compromise agreement[61] allegedly entered into by Costales and Almoite, together with
Ramos, Villagomez and Alegria, purportedly in settlement of the case before the NLRC, is not binding on
Costales and Almoite because they did not sign it. The company itself admitted[62] that while Costales and
Almoite were initially intended to be a part of the agreement, it did not pursue their inclusion due to their
regularization as early as January 11, 2006.[63]

WHEREFORE, premises considered, we hereby DENY the petition for lack of merit. The assailed
decision and resolution of the Court of Appeals are AFFIRMED. Costs against the petitioner Atlanta
Industries, Inc.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 114337 September 29, 1995

NITTO ENTERPRISES, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and ROBERTO CAPILI, respondents.

KAPUNAN, J.:

This petition for certiorari under Rule 65 of the Rules of Court seeking to annul the decision 1 rendered
by public respondent National Labor Relations Commission, which reversed the decision of the Labor
Arbiter.

Briefly, the facts of the case are as follows:

Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum products, hired
Roberto Capili sometime in May 1990 as an apprentice machinist, molder and core maker as evidenced
by an apprenticeship agreement 2 for a period of six (6) months from May 28, 1990 to November 28, 1990
with a daily wage rate of P66.75 which was 75% of the applicable minimum wage.

At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a piece of glass which he was
working on, accidentally hit and injured the leg of an office secretary who was treated at a nearby
hospital.

Later that same day, after office hours, private respondent entered a workshop within the office premises
which was not his work station. There, he operated one of the power press machines without authority
and in the process injured his left thumb. Petitioner spent the amount of P1,023.04 to cover the
medication of private respondent.

The following day, Roberto Capili was asked to resign in a letter 3 which reads:

August
2, 1990

Wala siyang tanggap ng utos mula sa superbisor at wala siyang experiensa kung papaano
gamitin and "TOOL" sa pagbuhat ng salamin, sarili niyang desisyon ang paggamit ng
tool at may disgrasya at nadamay pa ang isang sekretarya ng kompanya.
 Sa araw ding ito limang (5) minute ang nakakalipas mula alas-singko ng hapon siya ay
pumasok sa shop na hindi naman sakop ng kanyang trabaho. Pinakialaman at kinalikot
ang makina at nadisgrasya niya ang kanyang sariling kamay.

Nakagastos ang kompanya ng mga sumusunod:

Emergency and doctor fee P715.00

Medecines (sic) and others 317.04

Bibigyan siya ng kompanya ng Siyam na araw na libreng sahod hanggang matanggal ang
tahi ng kanyang kamay.

Tatanggapin niya ang sahod niyang anim na araw, mula ika-30 ng Hulyo at ika-4 ng
Agosto, 1990.

Ang kompanya ang magbabayad ng lahat ng gastos pagtanggal ng tahi ng kanyang

kamay, pagkatapos ng siyam na araw mula ika-2 ng Agosto.

Sa lahat ng nakasulat sa itaas, hinihingi ng kompanya ang kanyang resignasyon, kasama

ng kanyang comfirmasyon at pag-ayon na ang lahat sa itaas ay totoo.

Naiintindihan ko ang lahat ng nakasulat sa itaas, at ang lahat ng ito ay aking pagkakasala
sa hindi pagsunod sa alintuntunin ng kompanya.

(Sgd.) Roberto
Capili
Roberto Capili

On August 3, 1990 private respondent executed a Quitclaim and Release in favor of petitioner for and in
consideration of the sum of P1,912.79. 4

Three days after, or on August 6, 1990, private respondent formally filed before the NLRC Arbitration
Branch, National Capital Region a complaint for illegal dismissal and payment of other monetary
benefits.

On October 9, 1991, the Labor Arbiter rendered his decision finding the termination of private respondent
as valid and dismissing the money claim for lack of merit. The dispositive portion of the ruling reads:

WHEREFORE, premises considered, the termination is valid and for cause, and the
money claims dismissed for lack of merit.

The respondent however is ordered to pay the complainant the amount of P500.00 as
financial assistance.

SO ORDERED. 5
Labor Arbiter Patricio P. Libo-on gave two reasons for ruling that the dismissal of Roberto Capilian was
valid. First, private respondent who was hired as an apprentice violated the terms of their agreement when
he acted with gross negligence resulting in the injury not only to himself but also to his fellow worker.
Second, private respondent had shown that "he does not have the proper attitude in employment
particularly the handling of machines without authority and proper training. 6

On July 26, 1993, the National Labor Relations Commission issued an order reversing the decision of the
Labor Arbiter, the dispositive portion of which reads:

WHEREFORE, the appealed decision is hereby set aside. The respondent is hereby
directed to reinstate complainant to his work last performed with backwages computed
from the time his wages were withheld up to the time he is actually reinstated. The
Arbiter of origin is hereby directed to further hear complainant's money claims and to
dispose them on the basis of law and evidence obtaining.

SO ORDERED. 7

The NLRC declared that private respondent was a regular employee of petitioner by
ruling thus:

As correctly pointed out by the complainant, we cannot understand how an

apprenticeship agreement filed with the Department of Labor only on June 7, 1990 could
be validly used by the Labor Arbiter as basis to conclude that the complainant was hired
by respondent as a plain "apprentice" on May 28, 1990. Clearly, therefore, the
complainant was respondent's regular employee under Article 280 of the Labor Code, as
early as May 28,1990, who thus enjoyed the security of tenure guaranteed in Section 3,
Article XIII of our 1987 Constitution.

The complainant being for illegal dismissal (among others) it then behooves upon
respondent, pursuant to Art. 227(b) and as ruled in Edwin Gesulgon vs. NLRC, et al.
(G.R. No. 90349, March 5, 1993, 3rd Div., Feliciano, J.) to prove that the dismissal of
complainant was for a valid cause. Absent such proof, we cannot but rule that the
complainant was illegally dismissed. 8

On January 28, 1994, Labor Arbiter Libo-on called for a conference at which only private respondent's
representative was present.

On April 22, 1994, a Writ of Execution was issued, which reads:

NOW, THEREFORE, finding merit in [private respondent's] Motion for Issuance of the
Writ, you are hereby commanded to proceed to the premises of [petitioner] Nitto
Enterprises and Jovy Foster located at No. l 74 Araneta Avenue, Portero, Malabon, Metro
Manila or at any other places where their properties are located and effect the
reinstatement of herein [private respondent] to his work last performed or at the option of
the respondent by payroll reinstatement.

You are also to collect the amount of P122,690.85 representing his backwages as called
for in the dispositive portion, and turn over such amount to this Office for proper
disposition.
 Petitioner filed a motion for reconsideration but the same was denied.

Hence, the instant petition for certiorari.

The issues raised before us are the following:

WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE

OF DISCRETION IN HOLDING THAT PRIVATE RESPONDENT WAS NOT AN
APPRENTICE.

II

WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE

OF DISCRETION IN HOLDING THAT PETITIONER HAD NOT ADEQUATELY
PROVEN THE EXISTENCE OF A VALID CAUSE IN TERMINATING THE
SERVICE OF PRIVATE RESPONDENT.

We find no merit in the petition.

Petitioner assails the NLRC's finding that private respondent Roberto Capili cannot plainly be considered
an apprentice since no apprenticeship program had yet been filed and approved at the time the agreement
was executed.

Petitioner further insists that the mere signing of the apprenticeship agreement already established an
employer-apprentice relationship.

Petitioner's argument is erroneous.

The law is clear on this matter. Article 61 of the Labor Code provides:

Contents of apprenticeship agreement. Apprenticeship agreements, including the main

rates of apprentices, shall conform to the rules issued by the Minister of Labor and
Employment. The period of apprenticeship shall not exceed six months. Apprenticeship
agreements providing for wage rates below the legal minimum wage, which in no case
shall start below 75% per cent of the applicable minimum wage, may be entered into only
in accordance with apprenticeship program duly approved by the Minister of Labor and
Employment. The Ministry shall develop standard model programs of apprenticeship.
(emphasis supplied)

In the case at bench, the apprenticeship agreement between petitioner and private respondent was
executed on May 28, 1990 allegedly employing the latter as an apprentice in the trade of "care
maker/molder." On the same date, an apprenticeship program was prepared by petitioner and submitted to
the Department of Labor and Employment. However, the apprenticeship Agreement was filed only on
June 7, 1990. Notwithstanding the absence of approval by the Department of Labor and Employment, the
apprenticeship agreement was enforced the day it was signed.
Based on the evidence before us, petitioner did not comply with the requirements of the law. It is
mandated that apprenticeship agreements entered into by the employer and apprentice shall be entered
only in accordance with the apprenticeship program duly approved by the Minister of Labor and
Employment.

Prior approval by the Department of Labor and Employment of the proposed apprenticeship program is,
therefore, a condition sine quo non before an apprenticeship agreement can be validly entered into.

The act of filing the proposed apprenticeship program with the Department of Labor and Employment is a
preliminary step towards its final approval and does not instantaneously give rise to an employer-
apprentice relationship.

Article 57 of the Labor Code provides that the State aims to "establish a national apprenticeship program
through the participation of employers, workers and government and non-government agencies" and "to
establish apprenticeship standards for the protection of apprentices." To translate such objectives into
existence, prior approval of the DOLE to any apprenticeship program has to be secured as a
condition sine qua non before any such apprenticeship agreement can be fully enforced. The role of the
DOLE in apprenticeship programs and agreements cannot be debased.

Hence, since the apprenticeship agreement between petitioner and private respondent has no force and
effect in the absence of a valid apprenticeship program duly approved by the DOLE, private respondent's
assertion that he was hired not as an apprentice but as a delivery boy ("kargador" or "pahinante") deserves
credence. He should rightly be considered as a regular employee of petitioner as defined by Article 280 of
the Labor Code:

Art. 280. Regular and Casual Employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade
of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such activity exists. (Emphasis supplied)

and pursuant to the constitutional mandate to "protect the rights of workers and promote their
welfare." 9

Petitioner further argues that, there is a valid cause for the dismissal of private respondent.

There is an abundance of cases wherein the Court ruled that the twin requirements of due process,
substantive and procedural, must be complied with, before valid dismissal exists. 10 Without which, the
dismissal becomes void.
The twin requirements of notice and hearing constitute the essential elements of due process. This simply
means that the employer shall afford the worker ample opportunity to be heard and to defend himself with
the assistance of his representative, if he so desires.

Ample opportunity connotes every kind of assistance that management must accord the employee to
enable him to prepare adequately for his defense including legal representation. 11

As held in the case of Pepsi-Cola Bottling Co., Inc. v. NLRC: 12

The law requires that the employer must furnish the worker sought to be dismissed with
two (2) written notices before termination of employee can be legally effected: (1) notice
which apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) the subsequent notice which informs the employee of the employer's
decision to dismiss him (Sec. 13, BP 130; Sec. 2-6 Rule XIV, Book V, Rules and
Regulations Implementing the Labor Code as amended). Failure to comply with the
requirements taints the dismissal with illegality. This procedure is mandatory, in the
absence of which, any judgment reached by management is void and in existent
(Tingson, Jr. vs. NLRC, 185 SCRA 498 [1990]; National Service Corp. vs. NLRC, 168
SCRA 122; Ruffy vs. NLRC. 182 SCRA 365 [1990]).

The fact is private respondent filed a case of illegal dismissal with the Labor Arbiter only three days after
he was made to sign a Quitclaim, a clear indication that such resignation was not voluntary and deliberate.

Private respondent averred that he was actually employed by petitioner as a delivery boy ("kargador" or
"pahinante").

He further asserted that petitioner "strong-armed" him into signing the aforementioned resignation letter
and quitclaim without explaining to him the contents thereof. Petitioner made it clear to him that anyway,
he did not have a choice. 13

Petitioner cannot disguise the summary dismissal of private respondent by orchestrating the latter's
alleged resignation and subsequent execution of a Quitclaim and Release. A judicious examination of
both events belies any spontaneity on private respondent's part.

WHEREFORE, finding no abuse of discretion committed by public respondent National Labor Relations
Commission, the appealed decision is hereby AFFIRMED.

SO ORDERED.
 THIRD DIVISION

[G.R. No. 122917. July 12, 1999]

MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID, DAVID P.

PASCUAL, RAQUEL ESTILLER, ALBERT HALLARE, EDMUND M. CORTEZ,
JOSELITO O. AGDON GEORGE P. LIGUTAN JR., CELSO M. YAZAR, ALEX G.
CORPUZ, RONALD M. DELFIN, ROWENA M. TABAQUERO, CORAZON C. DELOS
REYES, ROBERT G. NOORA, MILAGROS O. LEQUIGAN, ADRIANA F.
TATLONGHARI, IKE CABANDUCOS, COCOY NOBELLO, DORENDA
CANTIMBUHAN, ROBERT MARCELO, LILIBETH Q. MARMOLEJO, JOSE E.
SALES, ISABEL MAMAUAG, VIOLETA G. MONTES, ALBINO TECSON, MELODY V.
GRUELA, BERNADETH D. AGERO, CYNTHIA DE VERA, LANI R. CORTEZ, MA.
ISABEL B. CONCEPCION, DINDO VALERIO, ZENAIDA MATA, ARIEL DEL PILAR,
MARGARET CECILIA CANOZA, THELMA SEBASTIAN, MA. JEANETTE
CERVANTES, JEANNIE RAMIL, ROZAIDA PASCUAL, PINKY BALOLOA,
ELIZABETH VENTURA, GRACE S. PARDO & RICO TIMOSA, petitioners vs.
NATIONAL LABOR RELATIONS COMMISSION & FAR EAST BANK AND TRUST
COMPANY, respondents.

DECISION
PANGANIBAN, J.:

The Magna Carta for Disabled Persons mandates that qualified disabled persons be granted the same
terms and conditions of employment as qualified able-bodied employees. Once they have attained the
status of regular workers, they should be accorded all the benefits granted by law, notwithstanding written
or verbal contracts to the contrary. This treatment is rooted not merely on charity or accommodation, but
on justice for all.

The Case

Challenged in the Petition for Certiorari[1] before us is the June 20, 1995 Decision[2] of the National
Labor Relations Commission (NLRC),[3] which affirmed the August, 22 1994 ruling of Labor Arbiter
Cornelio L. Linsangan. The labor arbiters Decision disposed as follows:[4]

WHEREFORE, judgment is hereby rendered dismissing the above-mentioned complaint for lack of merit.

Also assailed is the August 4, 1995 Resolution[5] of the NLRC, which denied the Motion for
Reconsideration.

The Facts
The facts were summarized by the NLRC in this wise:[6]

Complainants numbering 43 (p. 176, Records) are deaf-mutes who were hired on various periods from
1988 to 1993 by respondent Far East Bank and Trust Co. as Money Sorters and Counters through a
uniformly worded agreement called Employment Contract for Handicapped Workers. (pp. 68 & 69,
Records) The full text of said agreement is quoted below:

EMPLOYMENT CONTRACT FOR HANDICAPPED WORKERS

This Contract, entered into by and between:

FAR EAST BANK AND TRUST COMPANY, a universal banking corporation duly organized and
existing under and by virtue of the laws of the Philippines, with business address at FEBTC Building,
Muralla, Intramuros, Manila, represented herein by its Assistant Vice President, MR. FLORENDO G.
MARANAN, (hereinafter referred to as the BANK);

- and -

________________, ________________ years old, of legal age, _____________, and residing at

__________________ (hereinafter referred to as the (EMPLOYEE).

WITNESSETH: That

WHEREAS, the BANK, cognizant of its social responsibility, realizes that there is a need to provide
disabled and handicapped persons gainful employment and opportunities to realize their potentials, uplift
their socio-economic well being and welfare and make them productive, self-reliant and useful citizens to
enable them to fully integrate in the mainstream of society;

WHEREAS, there are certain positions in the BANK which may be filled-up by disabled and
handicapped persons, particularly deaf-mutes, and the BANK ha[s] been approached by some civic-
minded citizens and authorized government agencies [regarding] the possibility of hiring handicapped
workers for these positions;

WHEREAS, the EMPLOYEE is one of those handicapped workers who [were] recommended for
possible employment with the BANK;

NOW, THEREFORE, for and in consideration of the foregoing premises and in compliance with Article
80 of the Labor Code of the Philippines as amended, the BANK and the EMPLOYEE have entered into
this Employment Contract as follows:

1. The BANK agrees to employ and train the EMPLOYEE, and the EMPLOYEE agrees to diligently and
faithfully work with the BANK, as Money Sorter and Counter.

2. The EMPLOYEE shall perform among others, the following duties and responsibilities:

i Sort out bills according to color;

ii. Count each denomination per hundred, either manually or with the aid of a counting machine;
iii. Wrap and label bills per hundred;

iv. Put the wrapped bills into bundles; and

v. Submit bundled bills to the bank teller for verification.

3. The EMPLOYEE shall undergo a training period of one (1) month, after which the BANK shall
determine whether or not he/she should be allowed to finish the remaining term of this Contract.

4. The EMPLOYEE shall be entitled to an initial compensation of P118.00 per day, subject to adjustment
in the sole judgment of the BANK, payable every 15th and end of the month.

5. The regular work schedule of the EMPLOYEE shall be five (5) days per week, from Mondays thru
Fridays, at eight (8) hours a day. The EMPLOYEE may be required to perform overtime work as
circumstance may warrant, for which overtime work he/she [shall] be paid an additional compensation of
125% of his daily rate if performed during ordinary days and 130% if performed during Saturday or [a]
rest day.

6. The EMPLOYEE shall likewise be entitled to the following benefits:

i. Proportionate 13th month pay based on his basic daily wage.

ii. Five (5) days incentive leave.

iii. SSS premium payment.

7. The EMPLOYEE binds himself/herself to abide [by] and comply with all the BANK Rules and
Regulations and Policies, and to conduct himself/herself in a manner expected of all employees of the
BANK.

8. The EMPLOYEE acknowledges the fact that he/she had been employed under a special employment
program of the BANK, for which reason the standard hiring requirements of the BANK were not applied
in his/her case. Consequently, the EMPLOYEE acknowledges and accepts the fact that the terms and
conditions of the employment generally observed by the BANK with respect to the BANKs regular
employee are not applicable to the EMPLOYEE, and that therefore, the terms and conditions of the
EMPLOYEEs employment with the BANK shall be governed solely and exclusively by this Contract and
by the applicable rules and regulations that the Department of Labor and Employment may issue in
connection with the employment of disabled and handicapped workers. More specifically, the
EMPLOYEE hereby acknowledges that the provisions of Book Six of the Labor Code of the Philippines
as amended, particularly on regulation of employment and separation pay are not applicable to him/her.

9. The Employment Contract shall be for a period of six (6) months or from ____ to ____ unless earlier
terminated by the BANK for any just or reasonable cause. Any continuation or extension of this Contract
shall be in writing and therefore this Contract will automatically expire at the end of its terms unless
renewed in writing by the BANK.

IN WITNESS WHEREOF, the parties, have hereunto affixed their signature[s] this ____ day of
_________________, ____________ at Intramuros, Manila, Philippines.
In 1988, two (2) deaf-mutes were hired under this Agreement; in 1989 another two (2); in 1990, nineteen
(19); in 1991 six (6); in 1992, six (6) and in 1993, twenty-one (21). Their employment[s] were renewed
every six months such that by the time this case arose, there were fifty-six (56) deaf-mutes who were
employed by respondent under the said employment agreement. The last one was Thelma Malindoy who
was employed in 1992 and whose contract expired on July 1993.

xxxxxxxxx

Disclaiming that complainants were regular employees, respondent Far East Bank and Trust Company
maintained that complainants who are a special class of workers the hearing impaired employees were
hired temporarily under [a] special employment arrangement which was a result of overtures made by
some civic and political personalities to the respondent Bank; that complainant[s] were hired due to
pakiusap which must be considered in the light of the context of the respondent Banks corporate
philosophy as well as its career and working environment which is to maintain and strengthen a corps of
professionals trained and qualified officers and regular employees who are baccalaureate degree holders
from excellent schools which is an unbending policy in the hiring of regular employees; that in addition to
this, training continues so that the regular employee grows in the corporate ladder; that the idea of hiring
handicapped workers was acceptable to them only on a special arrangement basis; that it adopted the
special program to help tide over a group of handicapped workers such as deaf-mutes like the
complainants who could do manual work for the respondent Bank; that the task of counting and sorting of
bills which was being performed by tellers could be assigned to deaf-mutes; that the counting and sorting
of money are tellering works which were always logically and naturally part and parcel of the tellers
normal functions; that from the beginning there have been no separate items in the respondent Bank
plantilla for sorters or counters; that the tellers themselves already did the sorting and counting chore as a
regular feature and integral part of their duties (p. 97, Records); that through the pakiusap of Arturo
Borjal, the tellers were relieved of this task of counting and sorting bills in favor of deaf-mutes without
creating new positions as there is no position either in the respondent or in any other bank in the
Philippines which deals with purely counting and sorting of bills in banking operations.

Petitioners specified when each of them was hired and dismissed, viz:[7]

NAME OF PETITIONER WORKPLACE Date Hired Date Dismissed

1. MARITES BERNARDO Intramuros 12 NOV 90 17 NOV 93

2. ELVIRA GO DIAMANTE Intramuros 24 JAN 90 11 JAN 94

3. REBECCA E. DAVID Intramuros 16 APR 90 23 OCT 93

4. DAVID P. PASCUAL Bel-Air 15 OCT 88 21 NOV 94

5. RAQUEL ESTILLER Intramuros 2 JUL 92 4 JAN 94

6. ALBERT HALLARE West 4 JAN 91 9 JAN 94

7. EDMUND M. CORTEZ Bel-Air 15 JAN 91 3 DEC 93

8. JOSELITO O. AGDON Intramuros 5 NOV 90 17 NOV 93

9. GEORGE P. LIGUTAN, JR. Intramuros 6 SEPT 89 19 JAN 94

10. CELSO M. YAZAR Intramuros 8 FEB 93 8 AUG 93

11. ALEX G. CORPUZ Intramuros 15 FEB 93 15 AUG 93

12. RONALD M. DELFIN Intramuros 22 FEB 93 22 AUG 93

13. ROWENA M. TABAQUERO Intramuros 22 FEB 93 22 AUG 93

14. CORAZON C. DELOS REYES Intramuros 8 FEB 93 8 AUG 93

15. ROBERT G. NOORA Intramuros 15 FEB 93 15 AUG 93

16. MILAGROS O. LEQUIGAN Intramuros 1 FEB 93 1 AUG 93

17. ADRIANA F. TATLONGHARI Intramuros 22 JAN 93 22 JUL 93

18. IKE CABANDUCOS Intramuros 24 FEB 93 24 AUG 93

19. COCOY NOBELLO Intramuros 22 FEB 93 22 AUG 93

20. DORENDA CATIMBUHAN Intramuros 15 FEB 93 15 AUG 93

21. ROBERT MARCELO West 31 JUL 93[8] 1 AUG 93

22. LILIBETH Q. MARMOLEJO West 15 JUN 90 21 NOV 93

23. JOSE E. SALES West 6 AUG 92 12 OCT 93

24. ISABEL MAMAUAG West 8 MAY 92 10 NOV 93

25. VIOLETA G. MONTES Intramuros 2 FEB 90 15 JAN 94

26. ALBINO TECSON Intramuros 7 NOV 91 10 NOV 93

27. MELODY V. GRUELA West 28 OCT 91 3 NOV 93

28. BERNADETH D. AGERO West 19 DEC 90 27 DEC 93

29. CYNTHIA DE VERA Bel-Air 26 JUN 90 3 DEC 93

30. LANI R. CORTEZ Bel-Air 15 OCT 88 10 DEC 93

31. MA. ISABEL B. CONCEPCION West 6 SEPT 90 6 FEB 94

32. DINDO VALERIO Intramuros 30 MAY 93 30 NOV 93

33. ZENAIDA MATA Intramuros 10 FEB 93 10 AUG 93

34. ARIEL DEL PILAR Intramuros 24 FEB 93 24 AUG 93

35. MARGARET CECILIA CANOZA Intramuros 27 JUL 90 4 FEB 94

36. THELMA SEBASTIAN Intramuros 12 NOV 90 17 NOV 93

37. MA. JEANETTE CERVANTES West 6 JUN 92 7 DEC 93

38. JEANNIE RAMIL Intramuros 23 APR 90 12 OCT 93

39. ROZAIDA PASCUAL Bel-Air 20 APR 89 29 OCT 93

40. PINKY BALOLOA West 3 JUN 91 2 DEC 93

41. ELIZABETH VENTURA West 12 MAR 90 FEB 94 [SIC]

42. GRACE S. PARDO West 4 APR 90 13 MAR 94

43. RICO TIMOSA Intramuros 28 APR 93 28 OCT 93

As earlier noted, the labor arbiter and, on appeal, the NLRC ruled against herein petitioners. Hence,
this recourse to this Court.[9]

The Ruling of the NLRC

In affirming the ruling of the labor arbiter that herein petitioners could not be deemed regular
employees under Article 280 of the Labor Code, as amended, Respondent Commission ratiocinated as
follows:

We agree that Art. 280 is not controlling herein. We give due credence to the conclusion that
complainants were hired as an accommodation to [the] recommendation of civic oriented personalities
whose employment[s] were covered by xxx Employment Contract[s] with special provisions on duration
of contract as specified under Art. 80. Hence, as correctly held by the Labor Arbiter a quo, the terms of
the contract shall be the law between the parties.[10]

The NLRC also declared that the Magna Carta for Disabled Persons was not applicable, considering
the prevailing circumstances/milieu of the case.

Issues

In their Memorandum, petitioners cite the following grounds in support of their cause:
I. The Honorable Commission committed grave abuse of discretion in holding that the petitioners -
money sorters and counters working in a bank - were not regular employees.

II. The Honorable Commission committed grave abuse of discretion in holding that the employment
contracts signed and renewed by the petitioners - which provide for a period of six (6) months - were
valid.

III. The Honorable Commission committed grave abuse of discretion in not applying the provisions of the
Magna Carta for the Disabled (Republic Act No. 7277), on proscription against discrimination against
disabled persons.[11]

In the main, the Court will resolve whether petitioners have become regular employees.

This Courts Ruling

The petition is meritorious. However, only the employees, who worked for more than six months and
whose contracts were renewed are deemed regular. Hence, their dismissal from employment was illegal.

Preliminary Matter: Propriety of Certiorari

Respondent Far East Bank and Trust Company argues that a review of the findings of facts of the
NLRC is not allowed in a petition for certiorari. Specifically, it maintains that the Court cannot pass upon
the findings of public respondents that petitioners were not regular employees.
True, the Court, as a rule, does not review the factual findings of public respondents in
a certiorari proceeding. In resolving whether the petitioners have become regular employees, we shall not
change the facts found by the public respondent. Our task is merely to determine whether the NLRC
committed grave abuse of discretion in applying the law to the established facts, as above-quoted from the
assailed Decision.

Main Issue: Are Petitioners Regular Employees?

Petitioners maintain that they should be considered regular employees, because their task as money
sorters and counters was necessary and desirable to the business of respondent bank. They further allege
that their contracts served merely to preclude the application of Article 280 and to bar them from
becoming regular employees.
Private respondent, on the other hand, submits that petitioners were hired only as special workers and
should not in any way be considered as part of the regular complement of the Bank.[12] Rather, they were
special workers under Article 80 of the Labor Code. Private respondent contends that it never solicited the
services of petitioners, whose employment was merely an accommodation in response to the requests of
government officials and civic-minded citizens. They were told from the start, with the assistance of
government representatives, that they could not become regular employees because there were no
plantilla positions for money sorters, whose task used to be performed by tellers. Their contracts were
renewed several times, not because of need but merely for humanitarian reasons. Respondent submits that
as of the present, the special position that was created for the petitioners no longer exist[s] in private
respondent [bank], after the latter had decided not to renew anymore their special employment contracts.
At the outset, let it be known that this Court appreciates the nobility of private respondents effort to
provide employment to physically impaired individuals and to make them more productive members of
society. However, we cannot allow it to elude the legal consequences of that effort, simply because it now
deems their employment irrelevant. The facts, viewed in light of the Labor Code and the Magna Carta for
Disabled Persons, indubitably show that the petitioners, except sixteen of them, should be deemed regular
employees. As such, they have acquired legal rights that this Court is duty-bound to protect and uphold,
not as a matter of compassion but as a consequence of law and justice.
The uniform employment contracts of the petitioners stipulated that they shall be trained for a period
of one month, after which the employer shall determine whether or not they should be allowed to finish
the 6-month term of the contract. Furthermore, the employer may terminate the contract at any time for a
just and reasonable cause.Unless renewed in writing by the employer, the contract shall automatically
expire at the end of the term.
According to private respondent, the employment contracts were prepared in accordance with Article
80 of the Labor Code, which provides:

ART. 80. Employment agreement. Any employer who employs handicapped workers shall enter into an
employment agreement with them, which agreement shall include:

(a) The names and addresses of the handicapped workers to be employed;

(b) The rate to be paid the handicapped workers which shall be not less than seventy five (75%) per cent
of the applicable legal minimum wage;

(c) The duration of employment period; and

(d) The work to be performed by handicapped workers.

The employment agreement shall be subject to inspection by the Secretary of Labor or his duly authorized
representatives.

The stipulations in the employment contracts indubitably conform with the aforecited
provision. Succeeding events and the enactment of RA No. 7277 (the Magna Carta for Disabled
Persons),[13] however, justify the application of Article 280 of the Labor Code.
Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and
renewed the contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily, the renewal
of the contracts of the handicapped workers and the hiring of others lead to the conclusion that their tasks
were beneficial and necessary to the bank. More important, these facts show that they were qualified to
perform the responsibilities of their positions. In other words, their disability did not render them
unqualified or unfit for the tasks assigned to them.
In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled employee
should be given the same terms and conditions of employment as a qualified able-bodied person. Section
5 of the Magna Carta provides:

Section 5. Equal Opportunity for Employment.No disabled person shall be denied access to opportunities
for suitable employment. A qualified disabled employee shall be subject to the same terms and conditions
of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances
as a qualified able bodied person.

The fact that the employees were qualified disabled persons necessarily removes the employment
contracts from the ambit of Article 80. Since the Magna Carta accords them the rights of qualified able-
bodied persons, they are thus covered by Article 280 of the Labor Code, which provides:

ART. 280. Regular and Casual Employment. -- The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed for
a specific project or undertaking the completion or termination of which has been determined at the time
of the engagement of the employee or where the work or services to be performed is seasonal in nature
and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That, any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered as regular employee with respect to the activity in which he is employed and
his employment shall continue while such activity exists.

The test of whether an employee is regular was laid down in De Leon v. NLRC,[14] in which this
Court held:

The primary standard, therefore, of determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual trade or business of the
employer. The test is whether the former is usually necessary or desirable in the usual business or trade of
the employer. The connection can be determined by considering the nature of the work performed and its
relation to the scheme of the particular business or trade in its entirety. Also if the employee has been
performing the job for at least one year, even if the performance is not continuous and merely
intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the
necessity if not indispensability of that activity to the business. Hence, the employment is considered
regular, but only with respect to such activity, and while such activity exists.

Without a doubt, the task of counting and sorting bills is necessary and desirable to the business of
respondent bank. With the exception of sixteen of them, petitioners performed these tasks for more than
six months. Thus, the following twenty-seven petitioners should be deemed regular employees: Marites
Bernardo, Elvira Go Diamante, Rebecca E. David, David P. Pascual, Raquel Estiller, Albert Hallare,
Edmund M. Cortez, Joselito O. Agdon, George P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales,
Isabel Mamauag, Violeta G. Montes, Albino Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de
Vera, Lani R. Cortez, Ma. Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma.
Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura and Grace S.
Pardo.
As held by the Court, Articles 280 and 281 of the Labor Code put an end to the pernicious practice of
making permanent casuals of our lowly employees by the simple expedient of extending to them
probationary appointments, ad infinitum.[15] The contract signed by petitioners is akin to a probationary
employment, during which the bank determined the employees fitness for the job. When the bank
renewed the contract after the lapse of the six-month probationary period, the employees thereby became
regular employees.[16] No employer is allowed to determine indefinitely the fitness of its employees.
 As regular employees, the twenty-seven petitioners are entitled to security of tenure; that is, their
services may be terminated only for a just or authorized cause. Because respondent failed to show such
cause,[17] these twenty-seven petitioners are deemed illegally dismissed and therefore entitled to back
wages and reinstatement without loss of seniority rights and other privileges.[18] Considering the
allegation of respondent that the job of money sorting is no longer available because it has been assigned
back to the tellers to whom it originally belonged,[19] petitioners are hereby awarded separation pay in lieu
of reinstatement.[20]
Because the other sixteen worked only for six months, they are not deemed regular employees and
hence not entitled to the same benefits.

Applicability of the Brent Ruling

Respondent bank, citing Brent School v. Zamora[21] in which the Court upheld the validity of an
employment contract with a fixed term, argues that the parties entered into the contract on equal
footing. It adds that the petitioners had in fact an advantage, because they were backed by then DSWD
Secretary Mita Pardo de Tavera and Representative Arturo Borjal.
We are not persuaded. The term limit in the contract was premised on the fact that the petitioners
were disabled, and that the bank had to determine their fitness for the position. Indeed, its validity is
based on Article 80 of the Labor Code. But as noted earlier, petitioners proved themselves to
be qualified disabled persons who, under the Magna Carta for Disabled Persons, are entitled to terms and
conditions of employment enjoyed by qualified able-bodied individuals; hence, Article 80 does not apply
because petitioners are qualified for their positions. The validation of the limit imposed on their contracts,
imposed by reason of their disability, was a glaring instance of the very mischief sought to be addressed
by the new law.
Moreover, it must be emphasized that a contract of employment is impressed with public
interest.[22] Provisions of applicable statutes are deemed written into the contract, and the parties are not at
liberty to insulate themselves and their relationships from the impact of labor laws and regulations by
simply contracting with each other.[23]Clearly, the agreement of the parties regarding the period of
employment cannot prevail over the provisions of the Magna Carta for Disabled Persons, which mandate
that petitioners must be treated as qualified able-bodied employees.
Respondents reason for terminating the employment of petitioners is instructive. Because the Bangko
Sentral ng Pilipinas (BSP) required that cash in the bank be turned over to the BSP during business hours
from 8:00 a.m. to 5:00 p.m., respondent resorted to nighttime sorting and counting of money. Thus, it
reasons that this task could not be done by deaf mutes because of their physical limitations as it is very
risky for them to travel at night.[24] We find no basis for this argument. Travelling at night involves risks
to handicapped and able-bodied persons alike. This excuse cannot justify the termination of their
employment.

Other Grounds Cited by Respondent

Respondent argues that petitioners were merely accommodated employees. This fact does not change
the nature of their employment. As earlier noted, an employee is regular because of the nature of work
and the length of service, not because of the mode or even the reason for hiring them.
 Equally unavailing are private respondents arguments that it did not go out of its way to recruit
petitioners, and that its plantilla did not contain their positions. In L. T. Datuv. NLRC,[25] the Court held
that the determination of whether employment is casual or regular does not depend on the will or word of
the employer, and the procedure of hiring x x x but on the nature of the activities performed by the
employee, and to some extent, the length of performance and its continued existence.
Private respondent argues that the petitioners were informed from the start that they could not
become regular employees. In fact, the bank adds, they agreed with the stipulation in the contract
regarding this point. Still, we are not persuaded. The well-settled rule is that the character of employment
is determined not by stipulations in the contract, but by the nature of the work performed. [26] Otherwise,
no employee can become regular by the simple expedient of incorporating this condition in the contract of
employment.
In this light, we iterate our ruling in Romares v. NLRC:[27]

Article 280 was emplaced in our statute books to prevent the circumvention of the employees right to be
secure in his tenure by indiscriminately and completely ruling out all written and oral agreements
inconsistent with the concept of regular employment defined therein. Where an employee has been
engaged to perform activities which are usually necessary or desirable in the usual business of the
employer, such employee is deemed a regular employee and is entitled to security of tenure
notwithstanding the contrary provisions of his contract of employment.

xxxxxxxxx

At this juncture, the leading case of Brent School, Inc. v. Zamora proves instructive. As reaffirmed in
subsequent cases, this Court has upheld the legality of fixed-term employment. It ruled that the decisive
determinant in term employment should not be the activities that the employee is called upon to perform
but the day certain agreed upon the parties for the commencement and termination of their employment
relationship. But this Court went on to say that where from the circumstances it is apparent that the
periods have been imposed to preclude acquisition of tenurial security by the employee, they should be
struck down or disregarded as contrary to public policy and morals.

In rendering this Decision, the Court emphasizes not only the constitutional bias in favor of the
working class, but also the concern of the State for the plight of the disabled. The noble objectives of
Magna Carta for Disabled Persons are not based merely on charity or accommodation, but on justice and
the equal treatment of qualifiedpersons, disabled or not. In the present case, the handicap of petitioners
(deaf-mutes) is not a hindrance to their work. The eloquent proof of this statement is the repeated renewal
of their employment contracts. Why then should they be dismissed, simply because they are physically
impaired? The Court believes, that, after showing their fitness for the work assigned to them, they should
be treated and granted the same rights like any other regular employees.
In this light, we note the Office of the Solicitor Generals prayer joining the petitioners cause.[28]
WHEREFORE, premises considered, the Petition is hereby GRANTED. The June 20, 1995
Decision and the August 4, 1995 Resolution of the NLRC are REVERSED andSET ASIDE. Respondent
Far East Bank and Trust Company is hereby ORDERED to pay back wages and separation pay to each of
the following twenty-seven (27) petitioners, namely, Marites Bernardo, Elvira Go Diamante, Rebecca E.
David, David P. Pascual, Raquel Estiller, Albert Hallare, Edmund M. Cortez, Joselito O. Agdon, George
P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel Mamauag, Violeta G. Montes, Albino Tecson,
Melody V. Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez, Ma. Isabel B. Concepcion,
Margaret Cecilia Canoza, Thelma Sebastian, Ma. Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual,
Pinky Baloloa, Elizabeth Ventura and Grace S. Pardo. The NLRC is hereby directed to compute the exact
amount due each of said employees, pursuant to existing laws and regulations, within fifteen days from
the finality of this Decision. No costs.
SO ORDERED.